Closing tax


The fiscal closing is the process by which the company prepares and presents the results for the year, once all the corresponding adjustments have been made.

It is from this result, the so-called fiscal result, from which the taxes that the company has to pay are calculated, mainly corporate tax or income tax.

Process to carry out the fiscal closure

The process to carry out the fiscal closure consists, mainly, of two phases:

  1. Accounting closing: The result of the accounting year of the company is obtained. This result is obtained as the difference between annual income and expenses.
  2. Fiscal closing: Already in the second phase we obtain the fiscal result. To calculate it, we start from the accounting result that we have obtained in the previous phase and make a series of accounting adjustments. These adjustments may be the consequence of deductions allowed by the legislator, differences in amortization, etc. For example, it is common for the legislator to provide deductions for hiring disabled people or for investment in R&D. In this way, companies are encouraged to carry out these activities, since it translates into a lower tax to pay.

The fiscal closing is prepared annually. It is considered that in a year the productive cycle of a company has generally been completed and, in this way, the Administration ensures tax collection periodically.

The fiscal year does not have to start on January 1, that is, it does not necessarily have to coincide with the calendar year: the only requirement is that it last 12 months. For example, the fiscal year might be April 1 through March 31.

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