In accordance with the Latvian legal requirements, the income tax for business organizations is adjusted using asset depreciation, and calculated using the tax depreciation method. For example, taxable income is increased by the amount of depreciation and simultaneously decreased by the amount of tax depreciation. The tax depreciation method is an extension of the reducing balance method, which is used in Latvia to determine the income tax for business organizations. You can calculate tax depreciation for an individual asset or for a category of fixed assets.

You must prepare and submit tax depreciation reports with your annual corporate income tax returns.

  1. Click General ledger> Periodic> Tax depreciationto open the Tax depreciationform.

  2. Press CTRL+N to create a new calculation date for the tax depreciation. The current date is displayed by default. You can modify this date.

  3. In the Namefield, enter a name for the tax depreciation for the specified calculation date.

  4. In the Period statusfield, select the period status for the calculation date.

    Note Note

    If the period status is set to Stopped, you can change it to Openand recalculate the tax depreciation. If the period status is set to Closed, however, you cannot reopen the period and recalculate the tax depreciation.

  5. Click Calculateto calculate the tax depreciation for the value models that are selected in the Value modelsform.

    Note Note

    Each asset is assigned a tax category. Depending on the type of asset, tax depreciation is calculated for each asset or for all items in the category as a group. As an example, if depreciation is calculated for a category, the calculation would be: the total tax net book value of the category at the beginning of the period, plus the total value of any new acquisitions and capital improvements in that category over the period, minus the total financial net book value of disposals in the category over the period, multiplied by the defined depreciation rate for the category.

  6. Click the Valuestab and view the calculation results.

    Note Note

    To view the results by tax categories, select a value model in the Categoryfield. You can modify the calculation results, if necessary.

See Also