Background
In the current tax scenario, the SUNAT (Superintendencia Nacional de Aduanas y Administración Tributaria – National Superintendence of Customs and Tax Administration) has significantly increased its annual audit processes. Therefore, it is more important than ever to perform a thorough preventive review to ensure compliance and avoid costly penalties.
Critical Points in the Income Tax 2024 Calculation
Interest and Tax EBITDA Deduction
A fundamental aspect that companies must consider is the correct calculation of tax EBITDA. The current regulations establish specific limits to deduct financial expenses, and an error in this calculation may result in incorrect deductions that are subsequently observed by the SUNAT.
According to the current regulations, the limit for the deduction of net financial interest is 30% of the tax EBITDA (Earnings Before Interest, Tax, Depreciation, and Amortization) of the previous year and applies when net financial expenses exceed 2,500 UIT (Unidad Impositiva Tributaria – Applicable Tax Unit).
The tax EBITDA is calculated by taking the net income (after offsetting losses), plus net interest, depreciation, and amortization. Financial expenses exceeding this limit will not be deductible in the year, although they may be carried forward to the following four years.
Requirements for Deductible Expenses
Adequate documentation of expenses is still a critical point. The payment voucher is not enough, but each expense must comply with the requirements established in the Income Tax Law and its regulations to be supported with all the necessary supporting documentation.
It should be noted that the SUNAT has published a specific guide on the reliability and causality of the expense, detailing the recommended documents to support different types of transactions, which is a significant reference for companies when structuring their supporting files.
Treatment of Intangible Assets and Depreciation
Differences between the financial and tax treatment of intangible assets and depreciation must be correctly identified to quantify the allowances to be considered in the income tax calculation.
For example, while in accounting terms an asset can be depreciated according to its actual economic use, in tax terms it must adhere to the maximum rates allowed by law, which requires a particular follow-up of each asset to correctly quantify the tax repairs both for the year and accumulated.
Frequent Errors to Avoid
Late Accounting Update
One of the most common mistakes is to keep the accounting out of date until the annual tax return, which is frequent, for example, when the invoicing of suppliers of the previous year is only recorded in the first months of the following year, losing the opportunity to deduct the expense in the corresponding period according to the accrual criterion. Similarly, the deposits of deductions made after the deadline for not having a timely control of the vouchers subject to SPOT (Sistema de Pago de Obligaciones Tributarias – Payment System of Tax Liabilities) generate the loss of the tax credit and the expense deduction.
This practice affects business decision-making and can result in lost opportunities to deduct expenses in the correct period.
Intragroup Services
Companies receiving services from other group members must have the proper support of the Benefit Test. The SUNAT rigorously evaluates whether these services have generated real value for the local company, and the lack of documentation could disregard these deductions.
Proper support includes an organized file containing contracts, invoices, technical reports, progress reports, minutes of meetings, coordination emails, and, especially, indicators supporting enhancement of the service in the operation or profitability of the business, reporting the performance and profits earned, thus avoiding questions about the deductibility of the expense.
Relevant Technical Aspects
Derivative Financial Instruments
If your company employs derivative financial instruments, it must ensure that the appropriate tax treatment is complied with. Although these instruments may seem like risk hedging financially, the costs incurred from executing the contracts related to these instruments must adhere to the stipulations outlined in the Income Tax Law to be eligible for deduction under the causality principle of Article 37 of that Law.
Allowance for Doubtful Accounts
Provisions for doubtful accounts must meet specific conditions to be tax-deductible. It is crucial to check that each provision complies with the requirements established in the regulations, such as, for example, overdue debts, the existence of financial difficulties of the debtor, collections without results (evidenced by letters certified by a notary, mails, or protests of securities acts), record of the provision in the Inventory and Balance Sheet Book at year-end, and debts uncorresponding to related companies or unsecured by actual rights.
Compliance with these requirements must be duly documented to support the expense deductibility for SUNAT’s audits or control actions.
Do you need to ensure a successful tax closing? At VAG Global Tax & Legal, we have tax specialists to assist you in navigating these challenges. Our team offers customized advice to optimize your tax planning and reduce risks. Contact us for a consultation and let us be your strategic ally in tax compliance.