Prepayment on income tax paid during the year

Lesson Summary- Prepayment of Income ( profit ) tax  paid during the year for Cambodia Tax

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In general case, company will pay prepayment of income ( profit) tax to tax authority every month.

The prepayment of income ( profit) tax will be deducted from the income (profit) tax liability or minimum tax at the annual liquidation of the tax. If Prepayment of Income Tax exceeds the annual tax on income (profit) liability or minimum tax , the excess Prepayment of Income Tax can be carried forward indefinitely to offset against the future annual tax on income (profit) liability or minimum tax.

1.If Minimum Tax is higher than Profit ( Income ) Tax Liability

Minimum tax Liability = Minimum Tax – Prepayment of Income ( profit ) tax  paid during the year

2. If Minimum Tax is lower than Profit ( Income ) Tax Liability

Profit ( Income) Tax Payable = Profit ( Income ) Tax Liability – Prepayment of Income ( profit ) tax  paid during the year

Note:

1.If Minimum tax Liability < 0, so it is  Tax credit carried forward

2.If Profit ( Income) Tax Payable < 0, so it is Tax credit carried forward

Example 1

Below are tax information for XYZ Company:

– Profit (income) tax liability is $5,000

– Minimum tax is $20,000

-Prepayment of Income (profit) tax is $19,900

Required 

Calculate Profit ( Income) Tax Payable or Minimum tax Liability for XYZ Company.

Answer 

Calculate Profit ( Income) Tax Payable or Minimum tax Liability for XYZ Company

Because minimum tax is higher than Profit (income) tax liability ( $20,000 < $5,000), so we will take higher amount $20,000.

Minimum tax Liability = Minimum Tax – Prepayment of Income ( profit ) tax  paid during the year=$20,000-$19,900=$100

so Minimum tax Liability =$100