Rezerwy na zobowiązania a efektywna stopa podatku dochodowego od przedsiębiorstw

Anna Leszczyłowska

doi:10.33119/gn/100772

Abstract

The paper quantifies the impact of timing differences that emerge in the case of discrepancies between accounting and tax rules on the corporate tax burden. The objective of the paper is to investigate the effect of the accelerated deductibility of company expenses via provisions for future liabilities on the multi-period effective average corporate tax rate (EATR). In the investigation, pension provisions and so-called “other provisions” are taken into account and a multi-period backward-looking measure of the tax burden based on corporate cash flows is developed. The investigated companies are divided into several subgroups according to their size and multi-period cash flow. Under the current tax law, the highest tax burden among companies with positive cash flows is observed for medium-sized firms, at 33%. For small and large enterprises, the burden takes values of 24% and 25% respectively. A different situation is observed among firms with negative cash flows- in general, the EATRs are noticeably higher in this case. Under the current tax law, the average effective tax rates are 60% for all firms and 38%, 45% and 51% for medium-sized, small and large corporations respectively.If changes are made to the ways provisions for future payments are treated under tax regulations, a slight reduction may be observed in the multi-period average effective tax burden. In general, the timing effects of the deductibility of provisions lead to an average change in the effective tax rate from –1 percentage point (in the case of small companies with positive cash flows) to –4 percentage points (in the case of small entities with negative cash flows and medium-sized entities with positive cash flows). Although the differences in the median tax burden may seem to be slight, they are statistically significant.

Highlights

The level of conformity between financial accounting and tax accounting rules varies strongly across jurisdictions
The objective of the paper is to investigate the effects of the accelerated deductibility of company’s expenses, which occurs via provisions for future liabilities, on the multi-period effective average corporate tax rate (EATR)
This section deals with the effects of the deductibility of provisions on the average corporate income tax rates

Summary

Introduction

The level of conformity between financial accounting and tax accounting rules varies strongly across jurisdictions. One field in which differences are evident are provisions for future obligations. They reflect liabilities that are uncertain in timing or in amount. From a business perspective, creating provisions for future obligations is necessary to account for possible risks emerging from the enterprise’s activities and changing economic environment. Being recognized both in the balance sheet and, correspondingly, as costs in the profit and loss account, they are an important instrument of the accounting policy. As an example, creating provisions influences the amount of expenses and firm’s profitability

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