Entrepreneurs who conduct their business in the form of limited partnerships and who from 1 May will be obliged to settle CIT, do prepare for these tax changes. However, the reporting obligation may prove to be a problem, and so may the issue of closing the books. In the article, we explain how and when the financial statements should be prepared and whether it is necessary to close the books on 30 April 2021.
The act introducing CIT for limited partnerships allowed the new rules to be postponed until 30 April 2021, i.e., the companies are not subject to CIT until 1 May.
Therefore, a limited partnership which becomes a CIT taxpayer on 1 May 2021 is required for tax purposes to close its books as at the day before that date, i.e., 30 April 2021, but this is not always necessary.
The option not to close the books applies if the last day of the limited partnership's financial year falls between 31 December 2020 and 31 March 2021 and its financial year is extended to 30 April 2021.
Importantly, a company is not required to prepare financial statement for 30 April 2021 if its financial year runs from 1 January to 31 December 2021. Financial statement will then need to be prepared for that period.
Moreover, any income of the limited partnership generated before it was covered by corporate income tax is taxed under the existing rules. The new way of taxing income applies only after 1 May 2021.
To sum up, there are two options for limited partnerships to deal with the closing of the books on 30 April 2021, which are as follows:
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