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6.2. Main Differences between Commercial and Tax Accounting

Accounting treatments are usually followed in determining the assessable profits, except when there is an explicit tax law rule providing otherwise.

Expense items for which a tax adjustment is necessary in determining the amount of taxable profits from the accounting profits include:

  • tax depreciation allowance vs. accounting depreciation
  • expenses that are capital in nature  
  • general provisions that are non-deductible
  • non-deductible interest expenses on borrowings used to finance non-income producing assets

Book depreciation is adjusted for tax purposes in accordance with the following depreciation allowances.