Taxation, Accounting and Transparency: The Interaction of Financial and Tax Accounting

Abstract

In the last years, economic areas have constantly moved together. As a consequence, companies, especially the big players in the markets, have headed towards using the international capital markets and to get access to stock exchanges in different jurisdictions. As a prerequisite, the prevailing international accounting standards, be it IFRS and/or U.S. GAAP, have to be followed. On the other side, as tax legislation is still “local” and not harmonized, the companies always have to look for getting best tax environment they can for carrying on their businesses. The following article tries to summarize shortly the influence of internationalization on taxation and accounting in general and with regard to transparency of tax effects in the international accounts in particular. As a consequence of more transparency, it is important to be aware of possibilities and boundaries of existing influences on the tax rate as well and to clearly define a framework for tax planning, which not only is in line with legal requirements, but as well with ethical standards, as each individual company cannot afford loosing its good reputation.