Re:Zero taxes for startups in Albania
by vetinari on Thursday November 19, 2015 @07:29AM
(#10594364)
Investment is basically transforming one asset (cash) into another (tangible or intangible property). It doesn't say anything about profit and loss - and it's profit, that's taxed.
Now, in order to have some cash at all, you probably need some income - and that income, minus your costs is the profit, which will be taxed. So you want to turn your cash out for investment into cost, so you could minimize your earnings before taxes.
The catch is, that the investment is going to serve for years, so you can't deduce it all at once - you have to depreciate it (put a fraction of it's price into current years costs). [Of course, another reason is, that your country wants as much as taxes as possible right now, so for it more taxes paid now are better than zero taxes now and higher taxes next year.]
-- This is not an accounting advice, it is very simplified. Limitations apply. Consult a professional if you need it. There might be error due to printing or mistranslation. You know the drill.
Now, in order to have some cash at all, you probably need some income - and that income, minus your costs is the profit, which will be taxed. So you want to turn your cash out for investment into cost, so you could minimize your earnings before taxes.
The catch is, that the investment is going to serve for years, so you can't deduce it all at once - you have to depreciate it (put a fraction of it's price into current years costs). [Of course, another reason is, that your country wants as much as taxes as possible right now, so for it more taxes paid now are better than zero taxes now and higher taxes next year.]
-- This is not an accounting advice, it is very simplified. Limitations apply. Consult a professional if you need it. There might be error due to printing or mistranslation. You know the drill.