B Law & Tax
11 July 2023

Tax Advisor: Is it required to increase the global reserves of an entity to be able to apply the reduction of the taxable base of the Corporate Tax, as a depletion factor, in the case of mining regime?

The challenged ruling concluded that, according to the applicable precept, it is a necessary requirement to increase the entity’s reserve accounts by the same amount that the taxable income was reduced. Therefore, the claimant’s argument that there is no legal requirement in this regard is not accepted. The Administration has not considered any other benefit that is not related to the extraction of minerals when applying the depletion factor.

In summary, the increase in the entity’s reserves in the amount that the taxable base was reduced by the depletion factor is a legally inescapable requirement to apply the deduction. The question that raises an interest in the appeal lies in determining whether, within the scope of the reduction of the corporate income tax base in relation to the depletion factor in the mining tax regime, Article 100.3 of the TRLIS (current Article 93.3 of the IS Law) requires an increase in the balance of the entity’s reserve accounts in global terms or whether such increase should be limited only to the reserve accounts specifically endowed as a depletion factor.

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