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What should be considered when filling out Annex No. 1 of the "Profit Tax" Declaration?
What should be considered when filling out Annex No. 1 of the "Profit Tax" Declaration?
One of the most frequently asked questions among our colleagues concerns the completion of Annex No. 1 of the Profit Tax Declaration. This annex, which reflects a type of balance sheet information of the taxpayer, is titled "Information on Assets, Liabilities, and Equity for Tax Accounting Purposes."
There are three important aspects to pay attention to when completing Annex No. 1 of the declaration.
First point. The opening balances at the beginning of the reporting period must match the closing balances of the previous reporting period.
It is possible that the taxpayer has just started operations and is submitting their first report. In that case, the opening balances for the reporting period must be zero.
It is also possible that the taxpayer was previously operating under the simplified tax regime. In this case, the opening balances of the reporting period must match the closing balances indicated in Annex No. 1 of the last submitted Simplified Tax Declaration.
Example. If, by the end of 2023, the taxpayer had 10,000 manats in cash and 8,000 manats in receivables, these figures must be entered respectively as 10,000 and 8,000 manats in the “Cash and receivables” row under the “At the beginning of the reporting period” column of the Profit Tax Declaration for 2024.
Second point. The transactions (flows) during the reporting period must be balanced — in other words, equilibrium must be maintained.
Example 1. The taxpayer delivers goods worth 10,000 manats to the counterparty, and payment is received in the bank account. In this case, an increase in cash should be matched by a corresponding decrease in inventory in the active section of the declaration. The amounts must be equal. As can be seen from the example, this transaction is reflected solely in the asset section of the declaration.
Example 2. The taxpayer repays a credit debt of 20,000 manats to the counterparty. In this case, a decrease in cash in the active section should correspond with a decrease in liabilities in the passive section. This transaction causes changes in both asset and liability sections of the declaration.
Example 3. The founder of the legal entity contributes a vehicle worth 30,000 manats to the charter capital. In this case, there will be an increase of 30,000 manats in both the “Vehicles” section under assets and the “Charter capital” section under equity.
Third point. The closing balances at the end of the reporting period must also be equal (balanced). Naturally, if the opening balances and the flows during the period are correctly recorded and balanced, the closing balances will also match. Otherwise, an error or restriction will occur when attempting to save the declaration.
One of the most frequently asked questions among our colleagues concerns the completion of Annex No. 1 of the Profit Tax Declaration. This annex, which reflects a type of balance sheet information of the taxpayer, is titled "Information on Assets, Liabilities, and Equity for Tax Accounting Purposes."
There are three important aspects to pay attention to when completing Annex No. 1 of the declaration.
First point. The opening balances at the beginning of the reporting period must match the closing balances of the previous reporting period.
It is possible that the taxpayer has just started operations and is submitting their first report. In that case, the opening balances for the reporting period must be zero.
It is also possible that the taxpayer was previously operating under the simplified tax regime. In this case, the opening balances of the reporting period must match the closing balances indicated in Annex No. 1 of the last submitted Simplified Tax Declaration.
Example. If, by the end of 2023, the taxpayer had 10,000 manats in cash and 8,000 manats in receivables, these figures must be entered respectively as 10,000 and 8,000 manats in the “Cash and receivables” row under the “At the beginning of the reporting period” column of the Profit Tax Declaration for 2024.
Second point. The transactions (flows) during the reporting period must be balanced — in other words, equilibrium must be maintained.
Example 1. The taxpayer delivers goods worth 10,000 manats to the counterparty, and payment is received in the bank account. In this case, an increase in cash should be matched by a corresponding decrease in inventory in the active section of the declaration. The amounts must be equal. As can be seen from the example, this transaction is reflected solely in the asset section of the declaration.
Example 2. The taxpayer repays a credit debt of 20,000 manats to the counterparty. In this case, a decrease in cash in the active section should correspond with a decrease in liabilities in the passive section. This transaction causes changes in both asset and liability sections of the declaration.
Example 3. The founder of the legal entity contributes a vehicle worth 30,000 manats to the charter capital. In this case, there will be an increase of 30,000 manats in both the “Vehicles” section under assets and the “Charter capital” section under equity.
Third point. The closing balances at the end of the reporting period must also be equal (balanced). Naturally, if the opening balances and the flows during the period are correctly recorded and balanced, the closing balances will also match. Otherwise, an error or restriction will occur when attempting to save the declaration.