Amendments in the Corporate Income Tax Act

Amendments in the CITA were promulgated in SG, issue 75 dated September 9th 2016.

A new tax on the expenses for personal use, such as tax on expenses related with the operation of vehicles, used to perform management activity, was introduced.

With the new tax the personal use of all assets, regardless if they are own assets or assets provided to the enterprise shall be subject of taxation. The part of the expenses, corresponding to the personal use shall be subject of taxation, as those expenses shall not be subject to any other “alternative tax” under Art. 204 CITA.

Personal shall be any use of assets when performed by exhaustively listed in the law persons.

A new para. 2 of Art. 204 CITA was incorporated, stating that all alternative taxes shall be due and in case the expenses reduce the financial result for the year of the accounting.

The tax in case of personal use shall be determined and owe for a calendar year. The tax rate shall be determined depending on the type of the assets.

According to the new para. 3 of Art. 217 CITA, the taxable persons shall declare their choice under Art. 24, para. 3 of the Income Taxes on Natural Persons Act for the current year in the annual tax declaration, submitted for the previous year. The taxable persons have two possibilities: to pay the alternative tax on the expenses for personal use and to relieve their employees from personal income tax or not to pay alternative tax, as the employees shall be subject to personal income tax.