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How is the rental income of a legal entity taxed?
How is the rental income of a legal entity taxed?
LLC, a legal entity, is a tax payer with a 75 percent exemption. Does this LLC have to pay 14 percent tax at source on the equipment it leases, or does the 75 percent exemption also apply?
The State Tax Service under the Ministry of Economy said that for legal entities, income from rent is considered entrepreneurial income. A legal entity that rents out an object must calculate profit tax at the rate of 20 percent after deducting the expenses incurred in connection with the acquisition of such income from the income obtained from the rent, and submit the "Profit tax declaration" to the tax authority no later than March 31 of the year following the reporting year. must pay the calculated profit tax to the state budget by that time.
In addition, it was noted that according to Article 106.1.20 of the Tax Code, 75 percent of the profit obtained from the entrepreneurial activity of legal entities that are micro-entrepreneurial entities with an average monthly salary of not less than 3 people and who do not have debt for mandatory state social insurance contributions for the relevant year is exempt from tax.
The average monthly number of salaried employees for the relevant year is determined by summing the number of salaried employees during the calendar year and dividing by 12.
According to the survey, since the income from the lease is an entrepreneurial activity, the exemption mentioned in Article 106.1.20 of the Tax Code is applied if there is a right to exemption.
LLC, a legal entity, is a tax payer with a 75 percent exemption. Does this LLC have to pay 14 percent tax at source on the equipment it leases, or does the 75 percent exemption also apply?
The State Tax Service under the Ministry of Economy said that for legal entities, income from rent is considered entrepreneurial income. A legal entity that rents out an object must calculate profit tax at the rate of 20 percent after deducting the expenses incurred in connection with the acquisition of such income from the income obtained from the rent, and submit the "Profit tax declaration" to the tax authority no later than March 31 of the year following the reporting year. must pay the calculated profit tax to the state budget by that time.
In addition, it was noted that according to Article 106.1.20 of the Tax Code, 75 percent of the profit obtained from the entrepreneurial activity of legal entities that are micro-entrepreneurial entities with an average monthly salary of not less than 3 people and who do not have debt for mandatory state social insurance contributions for the relevant year is exempt from tax.
The average monthly number of salaried employees for the relevant year is determined by summing the number of salaried employees during the calendar year and dividing by 12.
According to the survey, since the income from the lease is an entrepreneurial activity, the exemption mentioned in Article 106.1.20 of the Tax Code is applied if there is a right to exemption.