Contents / income and expenses recognition

INCOME AND EXPENSES RECOGNITION

Income and expenses are recognised by cash method (upon payment only)

ORDER OF RECOGNITION OF EXPENSES FOR THE OBJECT OF TAXATION "INCOME MINUS EXPENSES"

EXPENSES
Expenses deductible in the same order as for the purposes of tax on profit:
  • material
  • payroll expenses
  • cost of purchased goods
  • some other expenses
Expenses deductible in other way than for the purposes of tax on profit:
  • expenses on fixed assets acquiring and their repairing (including leased fixed assets)
  • expenses on intangible assets acquiring
  • lease payments (including financial lease payments)
  • VAT on purchased goods (works and services)

Other payments may not be deducted from the tax base (in particular recruiting and training expenses)

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“Input” VAT
since VAT is not paid by taxpayers applying the simplified system of taxation, "input" VAT may be deducted from the tax base