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What is a deferred tax concept?

Publication date: 2012-12-06 05:39:16

You will easily understand why calculation of deferred tax is necessary, if you treat corporation tax as a cost and you will follow the principle of matching of costs and revenues. Income tax is a cost for companies and in theory, it should be equal to tax rate times the gross profit, but in practice it is computed on the taxable profit and therefore it is necessary to calculate deferred taxes in order to adhere to the income-cost matching principle.

Regards,
Slawomir Ekman
24iValue

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