Taxable equity is calculated the same way retained earnings are calculated for large corporations: ending equity will equal the beginning balance less withdrawals, plus contributions and other taxes, plus or minus any net income or loss for the period.
This formula is recalculated at the end of each tax year to determine the net balance at the end of the accounting period. In practical terms, it can be:
Taxable Equity = Assets at tax value – Liabilities payable at tax value
Methodologies for calculating taxable equity
Taxable equity is nothing more than the difference between the china mobile database assets and liabilities of each taxpayer —valued in a tax-related manner— and in order to calculate it we have different methods postulated by the Center for Tax Studies of the University of Chile, which we indicate below:
Asset method
This method for calculating taxable equity uses the company's total assets minus debts and losses to determine the tax value of the assets. Finally, liabilities valued for tax purposes are subtracted.
Equity method
This method for calculating equity consists of applying to the taxpayer's determined assets the work that was done when preparing the company's balance sheet, criteria and valuations stipulated in the Tax Code that will allow us to arrive at the calculation of Taxable Equity (CPT).
Comparison method
This methodology proposes drawing a parallel between financial assets and the taxable value payable to the State, the difference between which will help us determine the CPT.
It should be noted that this method may be more practical and less complex to use than those previously mentioned.