Annex V: methodology for calculating the net amount attributable to the performance of economic activity

The phases of the process are as follows:

1. Income subject to taxation will be subject to classification or association with a source of origin. Of the income classifications carried out, these are the ones of interest for the study because it is to them that we will associate a "net attributed share" to the economic activity:
   • R4: Income from economic activities in direct estimation plus attribution of income from business activities
   • R5: Income from economic activities in objective non-agricultural estimation
   • R6: Yields from agricultural and livestock activities in objective estimation
2. In a second phase, the reductions are determined, distinguishing between specific reductions that reduce a specific type of income, for example, reductions in work that reduce labor income, and the remaining reductions, which affect all incomes uniformly. These general reductions are:
   • Reduction for family units that opt for joint taxation
   • Reductions for contributions to the social security system
   • Reductions for compensatory pensions in favor of the spouse and alimony annuities
3. There are a series of deductions between the calculation of the full tax rate and the net tax rate, and as with reductions, there are general and specific ones. The specific ones associated with the returns on economic activity are the following:
   • Deductions for incentives and stimuli to business investment
   • Deductions for allocations to the reserve for investments in the Canary Islands
   • Deductions for income derived from the sale of tangible goods produced in the Canary Islands

The remaining deductions are considered independent of the type of income of the subject and are therefore allocated to each income based on the weight of each performance.

3.1.1. INDIVIDUAL MEASURE OF THE CONTRIBUTION TO THE FULL QUOTA

For each declarant "j" (individual or joint declaration) a vector of full quotas is determined

Where "i" is each type of regular income of declarant "j" and where each Cl_ji It is calculated as follows:

being:

• R_ji the yield "i" of declarant "j" for which the associated part of the Full Quota is being determined

• W_ji the weight of yield "i" on the sum of the yields of declarant "j"

Logically it is verified that:

3.1.2. INDIVIDUAL MEASURE OF CONTRIBUTION TO THE NET QUOTA

For each declarant "j" a vector of net quotas is determined

Being "i" each type of income of the declarant "j" and where each CL_ji is determined as follows:

• CI_ji the Full Share of declarant "j" associated with yield "i"
• D^E_ji the specific deductions applied by declarant "j" associated with income "i"

• w_ji the "weight" of yield "i" on the sum of yields of declarant j

• D^G_j general deductions, not associated with any particular type of income, applied by declarant "j".

Here too it is verified that

The net quota attributed to the economic activity is obtained by the procedure described. The effective rate attributed is calculated as the quotient between the net quota attributed to the economic activity and the income from the economic activity, expressed as a percentage.

3.1.2.1. Distribution of the Net Quota attributed to economic activities according to the method of determining the net income among the different activities that each declarant carries out in the same taxation method

Where "K" is each of the activities that the declarant "j" carries out under the same taxation modality "i", whose returns are accumulated in the variables R_ji for i=(4, 5, 6), the Net Quota attributed to each activity "K" is determined as follows:

provided that CL_ji> 0.

If CL_ji is less than or equal to 0, then CL_jik= 0 for all activity "K" of declarant "j" under modality "i".