First Amendment to Income Tax Regulation

On 20 July 2020, the MIRA introduced some important changes to the Income Tax Regulation (‘Regulation’) via the First Amendment to the Regulation. The key changes introduced via the Amendment are as follows:

1. Insurance companies are required to use MIRA 605 to file their income tax return;
2. Persons who are required to file and pay their interim payment can make an estimated interim filing for the first interim as well as second interim separately, provided they have a reasonable basis to do so.
3. Parent entities are required to submit consolidated financial statements with their income tax return for all entities in the group of entities to which it is the parent entity.
4. A list of the international accounting standards approved by the Commissioner General is published.

 
Tax Return of Insurance Companies

1. When the Income Tax Regulation was initially published, it required all taxpayers to file the same form – MIRA 604 – in filing their income tax returns.
2. With the amendment, insurance companies are required to file a separate form: MIRA 605.

 
Interm Payments

1. The Amendment provides that an estimated interim filing can be made separately for both the first interim as well as second interim provided there is a reasonable basis to do so. Previously it was not clear whether an estimated filing should apply to a single interim period or both periods.

Consolidation of Accounts

1. The Amendment requires parent entities – entities whose accounts prepared in accordance with international accounting standards accepted under the Regulation, determine that the entity is a parent entity – submit consolidated financial accounts of all subsidiary entities of the group to which the entity is the parent entity. 
2. In addition to this requirement, each entity in the group including the parent must submit separate financial statements prepared in accordance with the Regulation if they are required to do so, under any provisions of the ITA. Consolidated financial statements are required to be submitted together with the income tax return. The consolidated financial statements will probably serve as additional information source for MIRA as the tax calculations will anyway be based on individual financial statements.

Accounting Standards

1. The MIRA also included two other accounting standards approved by the Commissioner General as provided under the Income Tax Act:
   • International Financial Reporting Standards (IFRS) and International Accounting Standards (IAS);
   • IFRS for Small and Medium Sized Enterprises (IFRS for SMEs).