On October 25, the Supreme Court of Justice of the Nation (CSJN) settled the case “Phone”who discussed the possibility of update cancellations –previous years’ losses– for income taxes Profits.
The Income Tax Act (LIG) contains three methods of correcting the distortions which causes inflation in the measurement of taxable capacity for the purposes of this tax. The best known is the “Inflation Adjustment” or “complete adaptation”which seeks to correct the effects of inflation on the result for the closing year.
There is also the “update” of calculable costs (for example, from the sale of fixed assets) or from depreciable securities (to maintain the depreciation rate of fixed assets over time).
Finally there is the failed update, which was the central topic of discussion in the “Telefónica” case. The Income Tax Law (LIG) provides that losses incurred in a tax year, which cannot be reabsorbed with taxable profits for that same period, can be deducted from the taxable income obtained in the immediately following five (5) years. After this period, no deduction can be made from the loss that still remains, it will be lost forever.
Given the possibility of calculating the losses of previous years, the LIG also provides that they are updated taking into account the change in the Internal Wholesale Price Index (IPIM), made between the closing month of the financial year in which they originated and the closing month of the tax year in progress.
It may seem like a no-brainer at this point, but upgrading a game in an inflationary environment doesn’t mean winning more, it’s simply a mechanism for maintain the purchasing power of a monetary asset over time
Source: Clarin
