bezawit negash
Derive This term is central to the operation of the ITP as it defines the time when income is taken into account for tax purposes. For example, for business income tax purposes, the concept of derived defines the time when an amount is included in business income. Paragraph (a) applies for the purposes of the business income tax (i.e. tax imposed under Article18 and business income tax payable by a non-resident conducting an international air transportation business under Article 50) and rental income tax (i.e. tax imposed under Article 13). For these taxes, “derived” means received or receivable depending on a person’s method of tax accounting as determined under Article20(2). For a person accounting for business or rental income tax on an accruals basis, “derived” means the arising of the right to receive an amount of businessincome (i.e. derived means “receivable”). For a person accounting for business or rental income tax on a cash basis, “derived” means received. “Received” is defined in Article2(19) to mean an actual receipt or a constructive receipt. Paragraph (b) applies for the purposes of the taxes imposed under Schedules ‘A’ and ‘D’. For these taxes, derived means received (as defined in Article 2(19)).
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