An Overview of the Principle of Causality in Tax Matters
This video provides a general overview of the principle of causality in tax matters and explores examples of deductible and non-deductible expenses.
00:00:00 This video provides a general overview of the principle of causality in tax matters. It explains that deductible expenses must be necessary to generate income and maintain the source, including capital gains. The video also clarifies that the list of deductible expenses in the law is not exhaustive.
The principle of causality in taxation states that to determine the taxable income, necessary expenses for income generation and capital gains are deductible.
The list of deductible expenses provided in Article 37 is not exhaustive, and expenses not explicitly mentioned can still be deductible if they meet the conditions of being necessary for income generation or maintaining the income source.
The Article 44 of the law identifies non-deductible expenses, and the list in it should be interpreted strictly.
00:06:38 The video discusses the concept of necessary expenses in tax law and explores examples of deductible expenses that may not be directly causal. It also addresses the deduction of interest expenses related to purchasing shares and receiving dividends.
💡 The deductibility of expenses in taxation is based on the principle of necessity, not indispensability.
💼 The concept of necessity is defined as what a sensible taxpayer would consider advisable for the success of their business.
⚖️ The principle of causality in tax law recognizes certain expenses as deductible, even if they don't directly contribute to generating taxable income.
00:13:14 The video discusses the principle of causality in tax matters and provides examples of deductible and non-deductible expenses. It emphasizes that potentiality is important for a expense to be deductible, even if it does not directly contribute to taxable income.
📝 The principle of causality in tax matters determines the deductibility of expenses based on their contribution to generating taxable income or maintaining the income source.
💰 Expenses incurred solely for the purpose of earning dividends are not deductible as they do not contribute to producing taxable income or maintaining the income source.
⚖️ However, if expenses are incurred with the intention of consolidating a business, securing clients, or ensuring market synergies, they may be deductible based on their contribution potential.
00:19:50 This video discusses the principle of causality in tax matters, using a famous case as an example. It explores whether certain expenses incurred by a company are deductible based on their normality and reasonableness.
The case of Webb highlights the importance of honoring obligations to maintain commercial reputation.
An important question arises regarding whether a company can deduct the expenses of defending its general manager.
The concept of 'normal' expenses depends on the type of business activity and should be reasonable in relation to income.
00:26:28 The video discusses the concept of causality in tax matters and how expenses should be reasonable in relation to income. It also covers the deductibility of certain expenses.
💡 Losses can be carried forward for a specific number of years if expenses exceed income.
📈 Reasonability of expenses is determined based on the level of income.
🔑 General expenses related to employee bonuses and benefits are deductible.
00:33:04 This video discusses the general aspects of income tax and the principle of causality in tax matters. It explores the requirements for deductibility of extraordinary expenses to personnel and the criteria of generality. The video also highlights the deduction of expenses related to health, recreation, culture, and education, as well as additional contributions by employers for individual capitalization accounts. Overall, the video provides a general overview of these topics.
⭐ The video discusses the principle of causality in tax matters, specifically regarding deductibility of extraordinary bonuses and benefits given to employees.
⭐ To be deductible, the expenses must be general, meaning they must be given to all employees in the same conditions, based on objective criteria such as seniority, productivity, and performance.
⭐ If the expenses are not general, then they are not deductible, and the company will not be able to reduce its taxable income.
00:39:40 This video discusses the general aspects of income tax and the principle of causality in tax matters. It explains the criteria for deductibility of expenses and highlights specific cases where the law requires stricter criteria. The video also mentions non-deductible fines imposed by the national public sector and emphasizes the deductibility of expenses that contribute to income generation.
📚 The principle of causality in tax matters determines whether a expense is deductible or not.
💰 The law sets different criteria for deductibility based on the necessity, indispensability, and market considerations of the expense.
💼 Article 37 provides an illustrative list of deductible expenses, including expenses that help generate income or maintain the source of income.
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