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6.2. Main Differences between Commercial and Tax Accounting

Tax accounting used for determining the tax base of a company for income tax purposes, is based on the Income Statement required under commercial law. Nonetheless, there are some specific rules applicable to tax accounting. First of all, there are some expenses included in commercial income statement that are non-deductible costs for income tax purposes. These costs specified in article 9 of Law 7092 have to be added to the net income appearing in the commercial income statement. Additionally, there is some income registered in commercial income statement that is exempted from income tax. Therefore, these exempted income items have to be subtracted from the net income on which the tax is going to be levied.

Summing up, commercial income statement has to be adjusted by adding non-deductible costs and excluding exempted income, in order to obtain the taxable income.