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6.1. Main Rules Governing the Determination of Taxable Income

Tax accounting is based on the company’s audited profit and loss accounts, adjusted as required by tax laws. Taxable income is generally computed on an accrual basis and is equal to the difference between the net worth at the beginning of the taxable period and the net worth at the end of the taxable period.

Owing to the existence of specific tax rules (exemptions, restriction of deductions, etc.), the Royal Decree implementing the ITC (“RD-ITC”) (Arts. 74-79) describes eight successive steps used for the determination of the taxable income starting from the annual accounts (Arts. 74-79 RD-ITC).