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2. Empirical Method

Taxable profits are assessed empirically in the following cases:

The empirical figure is reached by applying a certain coefficient to the enterprise’s turnover and corresponds to the net profit. Accordingly, when the taxable sum is determined empirically, no account is taken of the expenses deductible when the enterprise is assessed according to its accounts (see page 290).

The coefficient is fixed by the general tax committee on a scale which divides industrial enterprises into classes according to their kind and purpose (see page 289). Minimum and maximum profit percentages are fixed for each class and the tax committee selects the rate it thinks suited to the particular enterprise.

These rates, however, may be reduced to nothing if the taxpayer can satisfy the committee that his real profit is less than the figure resulting from the coefficient. The committee, too, may increase the percentage indefinitely if the latter does not seem to it to reflect the real results of the enterprise.

The turnover figure on which the calculation is based is determined from the accounts or is based on some assumed figure.

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