What is corporate income tax and how to pay it

What is corporate income tax

It is paid by companies that operate on a common taxation system. The value directly depends on the financial results of the company. It is taxed on profit - money left over from income after expenses that are important for the activity. If the organization has not earned anything, then it will not have to make this payment.

Who pays corporate income tax

As the name implies, this tax is paid only by organizations of the Tax Code of the Russian Federation. Article 246. Taxpayers are Russian legal entities and foreign companies that receive income in the Russian Federation.

In this case, the payment does not apply to:

enterprises applying special tax regimes (unified agricultural tax, simplified taxation system, unified tax on imputed income);
payers of tax on gambling business;
participants of the Skolkovo Innovation Center project.

What is the rate for income tax

The tax rate is 20% of the RF Tax Code Article 284. Tax rates. 17% of the profit goes to the regional budget, 3% to the federal budget. For some activities, special rates or budget allocations apply. For example, all 20% of the profit received from the extraction of hydrocarbons goes to the federal treasury.

Regional authorities have the right to reduce their part of the rate for certain categories of taxpayers by Federal Law of 30.11.2016 N 401-FZ, but not more than to 12.5%.

How the tax base is calculated

Tax is charged on profits, that is, on the difference between income and expenses. Therefore, it is important to define each of the concepts.

Income - this is the proceeds from the sale of goods, works, services, property rights. Also taken into account are funds received not from core activities, but from equity participation in other organizations, in the form of interest on a loan, and so on.

At the same time, there is a rather long list of types of income that are exempt from taxation. This includes, for example, resort fees and earmarked funding. The entire list can be found in Article 251 Article 251. Income not taken into account when determining the tax base of the Tax Code.

Expenses - these are the reasonable costs of the enterprise, which can be confirmed by papers. This includes money used to pay employees' salaries, purchase materials, depreciation of fixed assets, court and arbitration fees, interest on loans, and so on.

For a Russian company or a foreign company operating in the Russian Federation through a representative office, the tax base will be equal to the difference between taxable income and expenses. For other foreign organizations, when calculating profits, not all types of income are taken into account - which ones are spelled out in article 309 of the Tax Code of the Russian Federation, Article 309 of the Tax Code of the Russian Federation.

How to calculate corporate income tax

Corporate income tax is charged annually. If we imagine the simplest formula, then it will look like this:

Tax = (Income - Expenses) × Tax Rate

But you will have to count separately for the tax credited to the regional and federal budgets. For example, your annual income is 5 million. The expenses amounted to 3.5 million. This means that you will have to give 17% of 1.5 million to the regional treasury and 3% to the federal one.

If other rates apply for some income, the amount payable is calculated separately. They need to keep separate records of income and expenses.

But there are also upfront payments. Most organizations are required to pay monthly, although some are allowed to do so on a quarterly basis. Exceptions include enterprises whose income for the previous four quarters did not exceed 15 million rubles per quarter, and some Article 286. The procedure for calculating tax and advance payments other companies.

Quarterly payments are calculated from actual income. Monthly - from the estimated (based on data for the previous reporting period).

Here's how the monthly payments are calculated:

In the first quarter, they are equal to payments calculated for the fourth quarter of the previous year.
In the second quarter, the monthly payment is one third of the amount of the advance paid for the first quarter.
In the third quarter, this is a third of the difference between the advance payment for the six months and the first quarter.
In the fourth quarter - a third of the difference in advance for 9 months and half a year.

For a quarterly advance, the formula would be:

Advance payment = (Income for the period - Expenses for the period) × Tax rate - Advance payment for the previous reporting period

For example, in six months the company earned 1.2 million and spent 400 thousand. For the first quarter, she paid an advance payment of 100 thousand rubles. Therefore, she will have to pay for half a year:

(1,200,000 - 400,000) × 20% - 100,000 = 60,000 rubles

New organizations do not pay monthly, but quarterly advance payments until the end of a full quarter from the date of their registration. After that, you need to estimate the revenue: if its size does not exceed 5 million per month or 15 per quarter, you can continue to pay quarterly.

When calculating corporate income tax, it is important to understand which income can be recognized in a certain period and which cannot. It depends on the way they are recognized. On a cash basis, income is recorded at the time of receipt, expenses - at the time of write-off. With the accrual method, both are taken into account at the time of occurrence, the actual timing of the transfer or write-off of money is not important.

If the reporting period ends with a loss, there is no need to pay monthly advance payments for the next quarter.

In addition, the organization has the right to reduce the tax base of the current period by the amount of the loss of the previous period, but not more than by 50%. While you are doing this, keep records of negative work results.

When to pay corporate income tax

Monthly advance payments are made no later than the 28th day of the current month, quarterly - no later than the 28th day of the month following the reporting period, the final annual payments - until March 28th.

When and how to submit income tax statements

Income tax returns must be submitted based on the results of the first quarter, six months, nine months and a year. It is provided to the inspection at the location of the organization and each of its separate divisions, if they are located in other regions.

The document must be submitted no later than the 28th day of the month following the reporting period, the annual declaration must be submitted by March 28th.