The Issues of Tax Law are Induced by Adoption of IFRS- Guidelines for Assessment of Profit-seeking Enterprise Income Tax Will Amend to IFRS
Date Issued
2011
Date
2011
Author(s)
Lin, Chang-Han
Abstract
Abstract
In order to connect with global capital market, Taiwan will adopt the IFRS in 2013. This strategy is not only a shift of paradigm but also brings some issues of tax law.
Whether selecting the general relationship between accounting and taxation to be independent or not, the countries adopting the IFRS have revised their tax laws correspondingly. For instance, Germany, a book-tax conformity country traditionally, separates financial accounting from taxable income determined by legislation since it focuses on the political authorities. In contrast, U.K., replaces its’ two-book approach with book-tax conformity because it focuses on corporate management with two considerations. The first consideration is to improve the accuracy of financial income and accounting income, and the second one is to reduce the incentives of managers who intend to increase accounting income and decrease tax income at the same time. Hence, Germany emphasizes more on the rules design stage of the book-tax relationship, while U.K. emphasizes more on the rules of the application stage. Both of these trends are not contradictory, in fact, they reflect the policies of financial accounting and tax are complementary and consistent.
The conclusion of this essay is obtained by summarizing the literatures based on issues of book-tax conformity, polices of tax accounting and financial accounting, the international perspective, and it also refers to experienced Germany and U.K.. Initializes from the concept of income, discuss the principle of legal protection on basis of good faith and the due process of law regarding the adoption of the IFRS. According to the ability to pay principle, using the book-tax conformity approach is recommended to solve the problems of the tax laws induced by IFRS. Finally, the amendments to Guidelines for Profit-seeking Enterprise Income Tax are proposed.
Subjects
IFRS
Book-Tax Conformity
Legal Protection on Basis of Good Faith
Ability to Pay Principle
Realization Doctrine
Guidelines for Assessment of Profit-seeking Enterprise Income Tax
Type
thesis
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