13. 9. 2024
Approval of the amendment to the Tax Code by the Government
Taxes
Introduction of the new National Accounting Standards Board Interpretation I-50
As a result of the introduction of the new tax regime for foreign exchange differences, the National Accounting Council has issued a new Interpretation I-50 dealing with deferred tax and foreign exchange differences excluded from taxation.
Under the legislation, effective through the end of 2023, foreign exchange differences entered both the income statement and the tax base. From 2024, companies can choose whether or not to include these exchange differences in the tax base. If a company chooses not to include exchange differences in the tax base, there will be a difference between how the receivable or debt is recognised in the accounts and how it is valued for tax purposes. This difference represents so-called deferred tax.
The carrying amount of receivables and payables denominated in a foreign currency will be based on the valuation in the accounts at the current exchange rate at the time the financial statements are prepared, while the tax value will take into account only those exchange differences that have entered the tax base. At the time of partial settlement of receivables or liabilities to which the scheme for excluding exchange differences from the tax base has been applied, the deferred tax will be adjusted proportionately. On full settlement, the deferred tax shall be dissolved.
If the company does not enter the new tax regime, the taxation of exchange differences shall not change for the company. On the other hand, if the new regime is used and the exchange differences are excluded from the tax base, the taxpayer will no longer be subject to the exchange differences tax treatment in force until the end of 2023.
The conditions for entering the exchange rate exclusion regime are set out in Sections 23i and 23j of the Income Tax Act. If you have any questions on this topic and the possibility of entering the exchange rate exclusion regime, please do not hesitate to contact the tax team of PKF APOGEO Tax.
Author: Anna Barešová
