What is a blue return for corporate tax?
Corporations that meet certain requirements can receive corporate tax benefits by filing a blue return.
There are White Return and Blue Return for the tax filing of corporations. Those who maintain proper accounts as required under the blue return system and report their income correctly based on those books and records are given certain privileges such as following.
-a loss carried forward can be offset against income for a specified period of time thereafter
– Losses can be carried back to offset the income of preceding year, although it is applied to limited corporations mainly SMEs
-Special income tax deductions are available
-Special depreciation methods available
-Other tax benefits are available.
-the tax authority is limited by presumption
Due to the privileges above, a large number of corporations are filing blue returns.
The corporation wishing to file a blue return must submit an application to the Tax Office by three months after establishment or prior to the beginning of the fiscal year for which the blue return is to be filed, whichever is earlier.
The application is usually approved very easily but it may cause the cancellation of approval if the corporation is regarded to fail to fulfill the necessary conditions, for example, the books are not kept in accordance with the statutory requirements or the filing tax return is done behind the statutory due date.
Blue Return is applied to individual income tax return as well.