Tax rules

To calculate the direct taxes under a given fiscal policy, in addition to setting:

the list of fiscal policies and the relative taxes;
the tax rates for every tax;
and the accounts that contribute to the definition of the tax base

it is necessary to set:

the necessary accounts in order to calculate the value of the taxes for the year, the value of tax credits, down payments and tax loss spreading;
the due dates for the payment of the various down payments and the balance.

This information can be set via access from the administrator-user’s web interface, following the path Set-up and Admin > Data processing > Taxes > Taxes setup - Output accounts.

Navigation panel> Data processing > Taxes > Taxes setup - Output accounts.

Tax is defined for fiscal policy / tax to be set up in the Attributes tab.

Once the fiscal policy and tax to be set up have been specified in theDirect Taxes tab, it is possible to define the accounts necessary for the system to generate the entries related to the direct taxes for the year, as well as the value of tax credits and tax loss spreading.

In detail, the accounts to be set up are:

Taxes. P&L account on which the taxes are booked
Accrual - credit variation. Variation balance sheet account on which the accruals for the tax that has already accrued but has not yet been recognised are booked.
Tax loss. Normal P&L account on which to register the year's negative result (it can be the usual P&L account used to book the year's net result);
Tax loss spreading: No. of years. Specifies the number of years for which the tax loss for a specific tax period can be deducted from the taxable income in subsequent years
Direct taxes monthly splitting rule. Monthly splitting rule to be applied to the taxes for the year. A tax can be split monthly:
based on statutory result. Monthly splitting takes place on the basis of the statutory result for every period of the year
based on a weight. Monthly splitting takes place on the basis of the “Weight for direct taxes monthly splitting”.
Weight for direct taxes monthly splitting. Weight by means of which the monthly splitting of annual taxes is obtained. It is possible to choose from among all the types of weights present in the weights list (accessible from the administrator-user’s web interface by following the path Setup & Admin > Data Processing tile > Cash Flow Planning > Advanced rules > Weight) Navigation panel> Data processing >Cash Flow Planning > Advanced rules > Weight).

The weight may be in twelfths, in which case the taxes are flat for the entire Budget period (a hypothesis which is not completely correct since that flat-rate tax might not coincide with the monthly tax base), or with a single period, typically December, which calculates the cumulative taxes at the year end

Accrual - debit variation. Variation balance sheet account on which the accruals for the tax that has already accrued but has not yet been recognised are booked.
Tax fund. Normal balance sheet account on which to register the amount payable/receivable for taxes
Tax fund: variation account. Variation account for the standard “Tax fund” account used for the registration of the amount payable/receivable for taxes. This account is entered when booking taxes for the period
Tax credit (P&L account). P&L account on which the P&L tax credit is booked
Tax credit (BS variation). Balance sheet variation account on which the balance sheet tax credit is booked

At this point, it is possible to set up the accounts necessary for the system to generate the entries for the down payments to be made for taxes, as well as the actual payment and balance thereof, in the Direct taxes and payments tab.

In detail, the accounts to be set up are:

Holidays. If the user wants to prevent the payment of taxes from being made on a public holiday, it is necessary to specify the holiday to be used.
Bank: credit variation. Variation account of the standard “Bank” account entered when the down payments are made and tax balance is paid
Credits due to down payments. Normal balance sheet account on which the amount receivable from the tax authority is saved when down payments for direct taxes are made
Statistical account: prev. year tax. Statistical account on which the tax for the previous year is saved and on which basis the system calculates the value of the down payments for the first planning year. In subsequent years, the system uses the P&L account on which the tax for the period is registered
Credits due to down payments: payment variation. Variation account of the standard “Credit due to down payments” account on which the amount receivable from the tax authority is booked when the down payment is made
Bank - debit variation. Variation account of the standard “Bank” account entered when the tax credit is collected
Tax fund: down payment write off. Credit variation of the “Tax fund” account for the down payment write off if the balance of the Tax fund is in credit.
For every down payment (the system provides for the possibility of managing four of them) it is necessary to specify:
the percentage that must be paid
the date on which it must be paid, duly defining the Day and Period fields
Down payment write off method. Write off method for the down payment made during the course of the year. The following methods are provided for:
Fiscal year end. The amount payable to the tax authority is written off with the balance of the “Credit due to down payments” on 31/12
Balance payment. The amount payable to the tax authority is written off with the balance of the “Credit due to down payments” upon the settlement of the tax liability.
Credit write off variation for down payments. Write off variation of the “Credits due to down payments” account that the system uses at year end or upon payment of the tax balance, in order to make a sort of account transfer and move the balance of the down payment account to the tax fund.
Tax balance payment fund. Debit variation of the “Tax fund” account entered upon the tax balance payment.
The payment date for the tax balance (understood to be the difference between the down payments made the previous year and the value of the taxes due for the previous year) must be specified, duly defining the Day and Period fields.