In this article we are going to analyse the fourth presumption of obtaining income included in article 121 of the Corporate Income Tax.
This presumption deals with the existence of undeclared income if non-existent debts have been recorded in the accounting books, since the existence of a fictitious liability in the accounts is the counterpart of hidden profits, which must be included in the tax base.
The Tax Agency can consider as non-existent debts the balances of suppliers or creditors that do not change over time, obliging the taxpayer to prove the origin or reality of the same, to prevent the Administration from presuming that undeclared income has been obtained or that there is a fictitious liability and, therefore, the Tax Agency understands that we have registered a non-existent debt that increases our expenses and reduces the profit, reducing the Taxable Base of the Corporate Tax.
Furthermore, this same article of the law, section 5, indicates that the amount of the income resulting from the presumptions contained in the previous sections will be imputed to the oldest tax period among the non-prescribed ones, unless the taxpayer proves that it corresponds to another or others.
This implies for the taxpayer that, in addition to incurring the penalty for the income that has not been declared, he/she will generate higher late payment interest, as this will be calculated from the oldest non-prescribed tax period.
It is therefore important to review these items included in the Corporate Income Tax with non-existent debts or fictitious liabilities, in order to avoid these future problems with the Administration.
