European Financial and Accounting Journal, 2014 (vol. 9), issue 4

Articles

Adjustments to Accounting Profit in Determination of the Income Tax Base: Evolution in the Czech Republic

Ladislav Mejzlík, Leoš Vítek, Jana Roe

European Financial and Accounting Journal 2014, 9(4):4-24 | DOI: 10.18267/j.efaj.127  

The article analyzes the main trends in income, tax base and tax deductions for Czech companies in years 1993 - 2012. After an initial survey of the problem, the article describes the issue of national accounting policy regulation in relation to IFRS and shows the evolution of main macroeconomic indicators of profitability and corporate taxation in the EU and the Czech Republic. The following part is based on data from the Ministry of Finance of the Czech Republic and monitors the development of corporate accounting profits, tax bases and tax deductions. All data collected for the purposes of this article were available only on an annual accrual basis...

Legal Consequences of the Determination of Corporate Income Tax Base Referring to IFRS

Jan Molín, Simona Jirásková

European Financial and Accounting Journal 2014, 9(4):25-44 | DOI: 10.18267/j.efaj.128  

This paper is concerned with certain legal consequences of the determination of corporate income tax base. The introductory part analyses the term tax, discusses the constitutional dimensions of taxation, and formulates requirements as to tax legislation. The subsequent part of the contribution discusses the structure of corporate income tax base of those taxpayers, which keep accounting records. Special emphasis is placed on the relationship of accounting revenues and income that is subject to tax. The topic is set in the context of Czech Supreme Administrative Court case law, as the Court has been previously concerned with the issue. Next, we explore...

Challenges in Auditing Income Taxes in the IFRS Environment: The Czech Republic Case

Petr Vácha

European Financial and Accounting Journal 2014, 9(4):45-58 | DOI: 10.18267/j.efaj.129  

This article looks at the complex and judgmental area of auditing income taxes in the environment of financial reporting in accordance with International Financial Reporting Standards as adopted by EU (IFRS) in the Czech Republic. In the first section, the main regulations that apply to entities preparing IFRS financial statements and their influence on income tax base are outlined. The second section summarizes the key steps in addressing risk of income tax misstatements when auditing financial statements. The third section discusses the specifics of auditing income taxes in the Czech environment and the alternative approaches the entities may adopt...

The IFRS as Tax Base: Potential Impact on a Small Open Economy

David Procházka

European Financial and Accounting Journal 2014, 9(4):59-75 | DOI: 10.18267/j.efaj.130  

The IFRS adoption has improved the quality of accounting information significantly. However, huge costs are incurred by all subjects involved. The process has considerable consequences for tax systems, too. State authorities are solving how to ensure the control over tax duty fulfilment under a new financial reporting system. As corporate income tax systems in code law countries are tightly bound up with accounting regulation, governments are forced to decide whether and in which way companies preparing financial statements under the IFRS shall reflect the IFRS based figures in their income tax returns. The paper focuses on specifics of a small open...

Current Income Tax Disclosures in Separate Financial Statements of IFRS Adopters in Slovakia

Miloš Tumpach, Adriana Stanková

European Financial and Accounting Journal 2014, 9(4):76-85 | DOI: 10.18267/j.efaj.131  

As a direct result of the accession into EU, IFRSs have been introduced in Slovakia as a framework for compilation of separate financial statements of various businesses since 2006. Because of traditionally strong ties between accounting and tax regulation, taxpayers and tax authorities were exposed to an unprecedented situation. Consequently, national parliament and the government have tried to address major identified issues. Apparently, two underlying principles have been established for carrying out these initiatives - to comply with the Regulation No. 1606/2002 and to keep the tax burden at the same level. Still, there is serious concern about...

Transition from US GAAP to IFRS: Analysis of Impact on Income Tax Administration in USA

Jana Roe

European Financial and Accounting Journal 2014, 9(4):86-109 | DOI: 10.18267/j.efaj.132  

When SEC and FASB started considering replacing US GAAP with IFRS, the impact of this change had to be considered by the various stakeholders in the financial reporting process in the U.S., including the various preparers and users of financial statements, including the Tax Administration, IRS. Since 2009, taxpayers in the U.S. are allowed to use IFRS as a starting point for reconciliation of book results to taxable income or loss, an option utilized by approximately 200 companies in that year. In 2010, TIGTA issued a report describing the state of preparedness for the potential transition from US GAAP to IFRS, outlining activities such as education...

Can a New Concept of Control under IFRS Have an Impact on a CCCTB?

Libor Vašek, Tereza Gluzová

European Financial and Accounting Journal 2014, 9(4):110-127 | DOI: 10.18267/j.efaj.133  

In May 2011, new standards of the IFRS regarding concept of control and related enhanced disclosure requirements were issued. These new standards have being mandatory effective since reporting period beginning on 1 January 2013 except for countries within European Union where effectiveness begun on 1 January 2014, one year later than official date approved by the IASB. An adoption of the new standards has raised lots of questions whether a scope of a consolidation will be changed based on a new concept of the control (whether more or less entities will be consolidated). The paper provides an analysis of expectations that result from financial statements...