1. An Accounting and Taxation Conundrum
The Relationship between Corporate Income Tax Accounting and Financial Accounting
CReCER Regional Conference
Mexico City – June 13 to 15, 2007

2. Agenda
1. Relationship between financial and corporate income tax reporting
2. The growing influence of IFRSs
3. Principles suitable for corporate income taxation purposes
4. Evaluation of IFRSs
5. Conclusions

3. Relationship between financial and corporate income tax reporting
Type 1
Taxable income = Accounting income
Type 2
Accounting income = Tax income
Type 3
Taxable income = Accounting income ± Adjustments
Type 4
Accounting income and tax income are independent

4. The growing influence of IFRSs
Consolidated
Financial
statements
Financial
statements
Influence on
national
accounting
standards
Effects on corporate income tax reporting
Likely to be minimal
Effects on corporate income tax reporting
Subject to degree of (in)dependence
Effects on corporate income tax reporting
Subject to degree of (in)dependence

5. Principles suitable for corporate income taxation purposes
Neutrality
Simplicity
Enforceability
Tax capacity
Revenue position
Public policy
Cost of reform

6. Evaluation of IFRSs    Assessment Neutrality Simplicity
  
Simplicity
Enforceability
Tax capacity
Revenue position
Public policy
Cost of reform

7. Conclusions Macro-economic implications The case for strong dependency
Legacy / transition
Simplicity
Compliance costs
Avoidance
The case for no dependency
Differing objectives
Hand over control
Incorporation in legal system

8. Further information Contact: Frederic Gielen Executive Director
Volans Finance Ltd
C/O avantage Capita Ltd
14 Fenchurch Avenue, 5th Floor
London, EC3M 5BS
United Kingdom
Phone: