As the accounting concept of turnover is an important magnitude from a tax point of view, we believe it is interesting to attach a recent Boicac Consultation on the components of turnover.
Consultation 2, BOICAC 126 OF JUNE 2021. On the components of turnover:
Question Asked: A company engaged in the manufacture and sale of footwear receives periodic income from the following activities, among others:
a) Lease of a warehouse.
b) Dividends from:
- A wholly-owned subsidiary dedicated to the footwear sector.
- A corporation considered as an associate owns 30% and is engaged in another line of business.
c) Financial income from loans granted to subsidiaries and associates.
The question raised is whether the aforementioned income should be included as a positive component of net sales.
Summary of response:
Ricac's Resolution of February 10, 2021 on revenue recognition includes in the computation of net sales certain financial income from investees that are subsidiaries or associates of an entity. However, the requirement that the investee be a securities holding company is established because in this case it is understood that such activity should be classified as ordinary. Therefore, financial income does not form part of operating income unless it derives from the ordinary activity of the entity (as is the case of a holding company).
With respect to income from leasing, and the expression "ordinary activity" of the company used in the definition of turnover, it should be noted that on certain occasions in business reality there is the simultaneous performance of several activities, which could be called multi-activity. In this case, it must be understood that the income produced by the different activities of the company will be considered in the computation of the ordinary activities, to the extent that they are obtained on a regular and periodic basis and are derived from the economic cycle of production, marketing or provision of services of the company, that is, from the circulation of goods and services that are the object of the company's traffic.