Abstract

This study reviews several tax cases which are the biggest issue of tax burden associated with the adoption of IFRS resulting from tax－reconciliation system that some expenses such as depreciation expenses should be reflected on accounting "book" in order to make－deductible. Also we reviews the changes of tax system in European countries after adopting IFRS and analyzes serious tax issues stemming from a shift to IFRS. There is a wide divergence of views among the tax authorities within the various EU countries as to appropriateness of allowing adoption of IFRS accounts as a basis for computing profits for corporate income tax purposes. As current taxation rules relies on accounting practice in a number of areas, the adoption of IFRS for financial reporting purposes will have flow－on consequences for taxation purposes. IFRS can be described as essentially investor focused. Thus, there is clearly a big tension between tax purpose accounts and IFRS accounts. There is a lot of discussion whether it is appropriate to adopt IFRS－based accounts for taxation purposes as conceptual tax policy matter in Europe. This study suggests appropriate alternatives which tax authorities can adopt IFRS－based accounts for taxation purpose. In conclusion, tax authorities will consider the quasi－dependent approach which IFRS－based accounts would be used as the starting point for computing taxable profits, although with specific departure allowed under the tax law and the abolishment of tax－reconciliation that some expenses should be reflected on accounting "book" in order to make－deductible.

Keywords

• IFRS
• Corporate Taxable income
• Tax－reconciliation

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