Article 6 stipulates that a taxpayer's income shall be computed using their regularly employed commercial accounting method, provided it fairly reflects their income. If the method is inadequate, the computation will be adjusted to one that is fair. The text explicitly identifies the accrual method of accounting—where income and deductions are recognised when the right or liability arises—as the standard for fairly reflecting income. Taxpayers may use their standard, commercially recognised method for currency conversion. The Article clarifies that key tax terms like 'accrue', 'paid', and 'received' are interpreted according to the taxpayer's accounting basis, whether accrual or cash.
Article 6
Income shall be computed as provided by this Decree and in accordance with the method of the commercial accounting regularly employed by the Taxpayer in keeping its records. If the method so employed does not fairly reflect the Taxpayer's income, the computation shall be made in accordance with such method as does fairly reflect its income. The accrual method of commercial accounting (that is, the method under which item of incomings and items of deduction are taken into account in the Taxable Period in which they accrue, that is to say, in which the right thereto or the liability therefore arises and the amount thereof becomes reasonably determinable) shall be considered as fairly reflecting the income. The Taxpayer shall be entitled to use the method regularly followed in its records for converting one currency to another, if such method is generally recognized in commercial accounting.
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