The Importance of the Reliability of Accounting Information in Determining Taxable Income

Abstract

Purpose: The aim of this research to achieve the possibility of achieving a positive interaction between accounting and tax and attention to the development of accounting standards and their adaptation to local tax legislation, and the importance of the reliability of accounting information contained in the financial statements with the International Accounting Standard (12) for the purpose of reaching tax profit based on accounting profit is increasingly important. Theoretical framework: There is a lack of reliability in the financial statements that represent the outputs of accounting, in other words that the accounting information does not spare the aspect of honest representation of business results and financial position and it does not clearly reflect the nature of the taxpayer's activity, as well as the above there is a difference between accounting profit and tax profit. Design/Methodology/Approach: The first section is the research methodology, the second section is the theoretical aspect, accounting information, the third section is the practical side, and the fourth section is the conclusions of recommendations in addition to the sources of research. The research community was in the General Authority for Taxation Companies Section and the research sample was for four local private shareholding companies, which are as follows: 1. Modern sewing company, 2. Iraqi Company for Carpets and Furnishings. 3. Al Mansour Company for Pharmaceutical Industries, Medical Supplies, Cosmetics and Sterile Water. 4. Baghdad Soft Drinks Company. The research sample consisted of a group of Iraqi private companies listed on the Iraqi Stock Exchange and the industrial sector selected private companies from among the rest of the sectors for the following reasons: 1. Of the companies listed on the Iraqi Stock Exchange within the industrial sector, the number of listed companies according to the reports of the Iraqi Stock Exchange (21) companies. 2. Of the traded companies, where the volume of traded shares according to the reports of the Iraqi Stock Exchange for the year 2020 (3140.8) million shares and a value of (10526.8) million dinars as it reached in 2021 (2913.5) million shares and the value of (9022.9) million dinars. Findings: The research focused on measuring the reliability of accounting information through measures of the quality of accounting profits of the companies of the research sample by adopting the reliability property to measure the degree of reliability of the financial statements of companies before and after the adoption of the application of the International Accounting Standard (IAS 12) in accordance with the local accounting rules adopted in the presentation of financial statements. The use of statistical methods in measuring the reliability of accounting information within the financial statements of private shareholding companies dealing in the Iraqi Stock Exchange, in accordance with the requirements of the application of the International Accounting Standard (IAS 12) income taxes. Study the requirements for the application of the International Accounting Standard (IAS 12) on income tax and its impact on the determination of taxable income. Research, practical & social implications: The accounting outputs, which are represented by the financial statements (final accounts and balance sheet) are the basis on which to rely when determining taxable income to complete the tax accounting process, and it is normal that the state of dependence on those accounting outputs (financial statements) depends on the degree of reliability of those outputs for the tax administration, and it is worth mentioning thestate of dependence on those accounting outputs (financial statements). Originality: the value of the study was to indicate the extent to which the reliability of accounting information affects the determination of taxable income through the measure of reliability of accounting information as follows: Reliability, Test the search measurement tool, Test the normal distribution of the reliability scale of the companies research sample, Testing research hypotheses, Analysis of regression results for the reliability of accounting information of the companies research sample, Checklist analysis.