Tax on dividends

Profit, as the financial result of a company’s operations at the end of the fiscal year, represents the positive difference between income and expenses, as determined in the company’s financial statement. This profit represents the realized business result and is treated as taxable profit. Taxable profit is the basis for corporate income tax, which is paid on the determined profit at a rate of 15%.

In addition to corporate income tax, the company is obligated to pay a monthly advance payment of income tax, which is due on the 15th of each month. The monthly advance is paid by the 15th of the month for the previous month. If there are changes in the business operations, market conditions, or other circumstances that affect the amount of the monthly advance payment, the company may submit documentation to adjust the amount of the advance.

In cases where profit or dividends are distributed to the founder in a legal entity that is a natural person, whether it is a company member or shareholder, the dividend is taxed. In this case, the tax is calculated and paid at a rate of 15%. The dividend paid to natural persons (residents or non-residents) is taxed on the gross amount, as the dividend distributed to a natural person is considered income from capital.

If the dividend is paid to a domestic legal entity, this income does not enter the total tax base. In other words, for a resident legal entity, no tax is calculated or paid on the dividend.

On the other hand, if the dividend is paid to a foreign legal entity, this income is taxable. If a non-resident legal entity receives income from a dividend from a resident legal entity, the withholding tax is calculated and paid at a rate of 20%. The tax rate may differ for foreign individuals and legal entities only through the application of an international agreement for the avoidance of double taxation.

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