A tax imposed on the net profits generated by companies, commercial, industrial, and service institutions, according to the Income Tax Law of 1986 and its amendments. Its rate is determined based on the type of activity and is paid annually after deducting allowed expenses. It aims to finance public services, regulate the market, and encourage economic development.
Procedure in case of non-filing of the tax return
If a person does not file a return of their earnings, whether the Secretary General has requested it or not, and the Secretary General deems that the person is subject to tax, he may, as he deems appropriate, assess the value of that person's earnings and subject them to tax.
The Secretary General shall be entrusted with implementing the provisions of this Act and collecting the tax levied thereunder.
(1) The tax shall be levied on every de facto or de jure gain resulting from any disposal that transfers the ownership of a capital asset.
(2) Disposals involving the transfer of ownership of company assets, which are subject to deduction and addition within the budget in accordance with the Income Tax Act of 1986, shall be excluded from the application of the provisions of Sub-section (1).
The levied tax shall accrue in every assessment and shall become due for payment within thirty days from the date of the assessment letter issued by the Secretary General.
The Secretary General may, upon reasonable grounds, extend the period within which the tax is due for payment and set a new date for its payment.
The Secretary General shall assess the gains of any person
subject to tax, as soon as possible, after the expiry of the
period specified for filing the return .
Tax shall be paid on the total capital gains, upon assessment, at the rates specified in Schedule II of this Act.
The gain subject to tax shall be determined after deducting the following amounts from the sale price of the capital asset:
(a) The purchase value or construction cost of the capital asset;
(b) Costs of improvements made to the capital asset during the period of ownership;
(c) Expenses related to the sale of the capital asset;
(d) Any amount paid as price differences in accordance with the Urban Planning and Land Disposal Act of 1994;
(e) Any other expenses as may be specified by the regulations.
(1) Any person who contests an assessment issued under the provisions of this Act may appeal such assessment by submitting a written notice to the Secretary General within thirty days from the date of the assessment. The notice shall not be considered valid unless it clearly states the grounds for the objection.
(2) If the appellant does not accept the decision of the Secretary General, they have the right to appeal to the Income Tax Committee within thirty days from the date of notification of the decision, provided that they pay 25% of the assessed tax amount or such amount as the Secretary General may deem appropriate.
The Secretary General or the aggrieved party may appeal the decision of the Income Tax Committee to the competent court for administrative appeals within thirty days from the date they become aware of the decision.
The following shall be exempted from tax:
(a) The gain realized by the National Government, or any of its units, or the units of the State Governments, local governance, public corporations, or institutions, from the sale of a capital asset;
(b) In the case of an individual, 25% of the value of the sale of the only owned house or the only plot of land, which has vested into the owner in a residential plan, or where he exchanges it, or it is exchanged by the purchase of another house or plot of land, within one year from the date of sale; provided that such exemption shall not be repeated throughout the life of the individual;
(c) The gain accruing to religious, educational, or social associations from the sale of their property;
(d) Re-assessment of assets presented by individuals and companies as subscription in kind to limited companies; shares corresponding to their portions, for at least four years. Where the shares or such assets are sold before that period, the capital gain shall be assessed based on the value of the assets before re-assessment thereof.
If any person incurs losses in any year from the sale of property subject to tax under this Act, the value of such losses shall be carried forward and deducted when calculating the taxable gains in the following year. However, these losses may not be carried forward for more than three years from the end of the year in which they occurred.
If the capital gains of any person are subject to tax under the provisions of this Act, those gains shall be assessed against that person, and the tax shall be levied accordingly.
Procedure in Case of Non-Filing of Return
If a person fails to submit a return of their gains—whether or not the Secretary General has requested it—and the Secretary General believes that the person is subject to tax, he may assess the value of the person’s gains as he sees fit and impose the corresponding tax.
Procedure in Case of Non-Payment of Tax at the Time Fixed
Where the tax is not paid at the fixed time, the Secretary General may apply the provisions of Chapter XIV of the Income Tax Act, 1986, as if the tax levied under the provisions of this Act were income tax.
The provisions of Chapter XV of the Income Tax Act, 1986
relating to offences and penalties, shall apply, as if the tax
levied, under the provisions of this Act, is an income tax. 19
When a person submits a return of their gains, the Secretary General may:
(a) Accept the return and assess the gains based on it;
(b) If he has reason to believe that the return is inaccurate, he may assess the person's gains as he sees appropriate. He may also seek assistance from evaluation committees he appoints, if deemed necessary. The opinion of these committees shall be consultative.
