Law 64, published in the official gazette on the 26th of October, 2017, noted an amendment to the Corporate Tax rate from 15% to 17%.
Minister of Finance (MOF) signed publication # 4859 (attached), dated 14/11/2017, outlines, at macro level the directions of the ministry as to the application of the aforesaid law, in two cut-off periods, as follows:
1) Profits realized up to 26/10/2017 are to be taxed at 15%
2) Profits realized from 27/10 to 31/12/2017 are to be taxed at 17%
What that entails, is the introduction of two fiscal period closing processes including as applicable, the recording of the stock variation and any changes to work in process, and all standard “closing and cut-off procedures”. This process will be effected for the two above-mentioned cut-0ff dates.
At this point, it is still unclear the extent of implications this change will have on finance and accounting teams as well as other stakeholders such accounting, auditing and tax reporting service providers. It is also unclear as to how this circular will be applied as…. Some views are eluding to apply a straight pro-rata of the 2017 (which could be simpler but in some ways not a true representation of the actual financial results achieved during the above noted fiscal periods), while others are interpreting the law as two separate cut-off periods and strongly presenting arguments against such pro-rata.
Our recommendation is to hold off and wait for updates on the subject from the MOF, in the form of application guidance.
We will keep updating this post as more information is available……..stay tuned !