How to write an explanation in the tax

Study tax law, which provides for a variety of events for loss-making enterprises. So, in clause 3, article 88 of the Tax code States that an explanation must be written in case of an error in a tax return, providing contradictory documents or discrepancies of the information reported by the taxpayer. To loss-reporting laws says nothing, so the inspectors refer to the last paragraph of the law and demanded to write an explanation, citing the incorrect calculation of income and expenses.

Remember that in case of providing a loss-reporting for several tax periods, the tax Inspectorate may take a decision to liquidate the company and file a lawsuit in court. This right is specified in item 11 of article 7 of Federal law No. 943-1 of 21 March 1991.

Make an explanation in any form to the head of the territorial tax authority. Explanatory must contain the reasons that justify the formation of loss by results of financial-economic activity of the enterprise for the previous reporting period. Consider what justification can be considered valid for the tax.

Let us know what funds were spent on the development of the company. This reason is ideal for new businesses since the beginning of their activities, they face greater competitiveness, development and search of partners.

Refer to conducting specific transactions. This cause can justify incidental expenses have a stable operating company. So you can specify that the company mastered the production of new or reconstructed assets, resulting in rising costs and falling sales.

Also loss can justify the loss of an important counterparty, who accounted for a large part of the profits. The basis of unprofitability may be a decrease in income. For example, report that the company has decided to temporarily reduce the price of goods to increase the competitiveness.