Range of data reported to the requirements of the IAS 12 and impact of the IFRS adoption for tax purposes in the tax collection of the Czech Republic

Abstract

An issue of relationship between corporate income tax and accounting is one of the most discussed at present. Until recently the tax base was derived from the accounting profit defined in the Czech accounting law. But from 2004 there are companies which have to use IFRS in bookkeeping and financial reporting and from the perspective of the Czech accounting law they do not care about Czech accounting regulation. On the other hand Czech tax regulation has not accepted this change in the field of European accounting harmonization and still directs to pay tax on the basis of Czech accounting regulation for all entities. Fear of adverse change in tax collection is one of the main reasons why the Czech Tax Administration does not allow to pay income tax under profit or loss patterned on IFRS. The most important goal of this work is to characterize the relationship between accounting profit or loss under IFRS and the tax base of income and to find out the impact of taxation under profit in accordance with IFRS in total tax collection. Basic sample of all analyses consists of 35 accounting entities which mandatorily use IFRS and this sample was also confronted with a list of 106 major payers of income tax published yearly by the Ministry of Finance of the Czech Republic for the needs characterization of the relationship of profit under IFRS and the tax base of income.