Taxable profits method
This methodology proposes balancing taxable assets by considering capital inflows or outflows plus the taxable profits accumulated by the company, which include reinvestments and tax-free profits.
To obtain a correct calculation of taxable equity, rejected expenses and accelerated or normal depreciation must be taken into account , among many other financial factors.
What changes have occurred in the calculation of equity capital with the enactment of tax modernization?
The concept of taxable equity has not been modified much in Chilean china mobile database tax regulations since 1974, being used as a form of monetary correction , determination of the amounts affected by gratuities established by law and valuation of municipal patents for different commercial areas.
Between reforms and new tax regimes , since 2017 equity has become a determining factor in processes of this nature, such as the income tax return, where the CPT is used to determine how much of the income or profits are subject to the payment of taxes for companies and other taxpayers subject to the Semi-Integrated Regime .
The calculation of equity helps to establish the basis for the single end-of-business tax if one is subject to both the Semi-Integrated Regime and the Attributed Income Regime.
Tax Modernization Law, tax equity became important when carrying out mergers, divisions or transformations in a company. It can also be applied to changes in tax regimes such as moving from Semi-Integrated to Attributed Income , capital reductions and other financial processes.
Article 14 of the Income Tax Law - amended by Parliament - establishes that companies that opt for the Pro Pyme regime can make a simplified calculation of their own tax capital , which will work in the same way for taxpayers who opt for the Pro Pyme Transparente regime if their income exceeds 50,000 UF.
Done! Now you know what equity is and how to calculate it, taking into account the changes brought about by tax modernization.
If you wish to continue learning more about the provisions of this new law and its characteristics, we invite you to download the ebook " General and Transparent Pro-SME Regime " so that you can do your work with all the information you need to know.