Commercial companies and other corporate income tax payers are required to submit their corporate income tax return for 2017 to the Tax Administration by the end of April. The return is submitted on the prescribed PD form, along with various attachments that supplement and explain certain positions of income, expenses, and utilized tax reliefs. The annual tax liability must be calculated on the established tax base at a rate of 12 or 18 percent, depending on the income earned. If the income in 2017 exceeded 3 million kuna, the corporate income tax must be paid at a rate of 18 percent, and if it was up to that amount, at a rate of 12 percent.
Simple Calculation
By the end of April, corporate income tax returns must be submitted, but when you will do this in the next two months depends on what your calculation shows. If you have overpaid this tax through advances, submit the return as soon as possible because the benefit follows immediately. If you have not and need to pay the difference, wait for the final deadline as it is also paid immediately after submission.
The annual tax liability is determined in the PD form, and the entrepreneur pays the difference between the advances paid during 2017 and the declared annual obligation in the first months of 2018. If the advances paid are less than the annual obligation, the difference must be paid. The difference must be paid immediately, on the day of submission of the PD form. The due date of the annual corporate income tax difference may encourage the submission of the PD form to be postponed until the final prescribed deadline. Although the entrepreneur has completed all bookkeeping, prepared the prescribed financial reports, and determined the business result, they may postpone the submission of the PD form until the last days of April to pay the annual tax difference for 2017 as late as possible.
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Conversely, if more tax has been paid through advances than the established tax obligation for 2017, it is in the taxpayer’s interest to submit the annual corporate income tax return as soon as possible. After submitting the annual return, their monthly advances for the next period are automatically reduced. Additionally, on the date of submission of the PD form, the tax authority will record the overpayment of corporate income tax in its records, and the taxpayer can allocate the overpaid amount as an advance for monthly advances for the next tax period, redirect it to pay other tax obligations, or request a refund of the overpaid corporate income tax.
Possible Reduction of Advances
Corporate income tax advances for the next tax period are determined by dividing the annual tax obligation stated on the PD form by the number of months of operation in the previous tax year. An entrepreneur who operated for the entire year divides the annual tax by 12. Those who were established during 2017 or whose tax period was shorter than the calendar year for some other reason divide the tax determined according to the PD form by the number of months of operation. If there is a need to reduce monthly tax advances during 2018 (e.g., if the scope of business significantly decreases), the taxpayer can request a reduction of tax advances from the Tax Administration. Of course, the Tax Administration will request data on the income and expenses incurred in part of 2018, based on which it will assess whether there are grounds for reducing the amounts of monthly corporate income tax advances.
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Taxpayers of income tax who perform self-employment are in a similar tax position. Craftsmen, freelancers, and farmers who determine their tax obligation based on the Book of Income and Expenses are required to submit their annual income tax return for 2017 by February 28, 2018. On the day of submission of the annual tax return, any difference in income tax becomes due. If they do not pay, default interest accrues from the date of submission of the DOH form. This is one of the reasons why those who have an obligation to pay the tax difference wait until the last days before the legal deadline expires. An individual can allocate overpaid income tax for paying advances for income tax for the next calendar year or for paying other outstanding tax obligations. If they wish to obtain a refund of the overpaid tax, they must request it in writing.
Calculation for Self-Employed
Income tax payers from self-employment calculate the monthly tax advances they are obliged to pay each month after submitting the tax return for the previous year. This calculation is very simple. The income earned from self-employment should be divided by the number of months of self-employment, and the average tax rate should be applied to the amount of monthly income. The resulting amount is the monthly advance for income tax from self-employment for the next year. If the taxpayer has also earned income from other sources (salary, pension, other income) in addition to income from self-employment, the share of income from self-employment in the total annual income is first calculated, then the average tax rate is applied to that amount, and the resulting tax amount is divided by the number of months of self-employment.
