What expenses are deductible for corporate income tax purposes?

What expenses are deductible for corporate income tax purposes?
Corporate income tax is a mess: which expenses are deductible and which are not? If there is one thing that makes this tax stand out, it is the tangle of deductible expenses that reduce the rate that companies will pay. However, there are others that are not included when accounting to the tax authorities.
Current corporate income tax regulations allow a number of expenses to be deducted from taxable income. This is because it is understood that in order to maintain a business it is necessary, for example, to purchase materials and pay for certain services that affect accounting profits.
Deductible expenses allow the state to reward certain types of investments or certain companies that help the economy to run smoothly. To do so, certain minimum requirements must be met:

• Expenditure must be included in the profit and loss account for the year, or in a reserve account if required by law or regulation.
• Expenditure must be justified. The administrative criterion states that expenses and losses that lack the legally required documentary support are not deductible.
• The allocation of income and expenditure must The actual flow of goods and services. This means that ehe accrual basis of assessment shall apply. There are special cases where other criteria can be used, such as cash basis, deferral of expenses and anticipation of income.
• Expenditure must be made in the carrying on the activity for the purpose of earning income.

Expenses deductible for corporate income tax purposes

With all this in mind, below are the expenses that will always be deductible for corporate tax purposes. Some of the most common ones:

• Deductions for investment incentives
• Deductions for Research and Innovation activities
• Deductions for conservation and improvement of the environment
• Deductions for vocational training costs
• Deductions for job creation
• Deductions for investment in book publishing, film productions and cultural assets

Non-deductible corporate income tax expenses

And in case there were any doubts, the law also details those that cannot be deducted in any case:

• Dividends and other forms of remuneration to shareholders for their equity participation.
• The expenditure of the Corporate Income Tax.
• The fines and penalties penal and administrative penalties, the penalty surcharge and the surcharge for late submission of declarations, settlements and self-assessments.
• The depreciation and provisions in excess of limits and assumptions set out in the rule.
• The losses in the game.
• Expenditure for services provided from tax havens or paid through persons or entities resident there, unless the taxable person proves that the expense incurred relates to a transaction actually carried out.
• The allocations to provisions or internal funds to provide cover for contingencies identical or analogous to those covered by the Consolidated Text of the Pension Plans and Funds Regulation Act.
• The donations and gifts, with the exception of:
  • Public relations with customers and suppliers with a limit on turnover.
  • Those which, in accordance with custom and practice, are carried out in respect of the company's personnel.
  • Those made to promote sales of goods and services.
  • Those that are correlated with income.