Taxes a significant cost for businesses. Among them are the CIT, VAT, PIT, social contributions, customs duties, local taxes (e.g. property tax). However, in a typical cash flow statement there is not a separate item to account for such charges, although a very important position in the cash flows from operating activities.

Although, in the statement of cash flows prepared using a direct method, each payment of taxes and other public charges (CIT, VAT, PIT, PCC, social security, customs, local taxes) is recognized, in the cash flow statements prepared using the indirect method it is not so often. This method is chosen by the majority of entities in in the cash flow statements prepared by them the taxes remain in net profit unit and are not a separate item, except for corporation tax payments that are separately recognized under the IFRS.

Have you ever wondered how would look your cash flow, if you have identified the item "Payment of taxes" (or perhaps better " extortion money payments ")? Soon we will present such an example.

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