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The taxpayer asks whether late payment interest arising from a settlement agreement is deductible for Corporate Tax purposes. The DGT rules that it is deductible due to its financial and compensatory nature, but remains subject to the limits set out in Article 16 of the Corporate Tax Act.
Companies must ensure that late payment interest, while deductible, is correctly accounted for within the financial expense limits to avoid tax adjustments.
The tax team reviews your specific situation.
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