Essence and classification of deferred taxes

Abstract

Deferred taxes are an important object of accounting observation, which has a significant impact on management decision-making by users. At the current stage of development of accounting and tax accounting theory and practice, many aspects of tax effect recognition in the financial information system still remain debatable. This provides possibilities, including for accounting fraud, associated with veiling profit indicators and items in the enterprises’ financial statements. This causes the relevance of studying the essential features of deferred taxes, as well as the analysis of global experience in the assessment of arising “differences”, their classification, and accounting methods. The scientific novelty of the study lies in the development and substantiation of classification features of deferred taxes, including their systematization by methods of accounting, assessment and varieties. The paper characterizes the reason for accounting and taxation deviations, the evolution of the key deferred taxes types is described, the criteria for their registration in finance accounting are considered as the legislation in the USA, Great Britain, and other countries is improved. The paper defines the key challenges of accounting and estimation of deferred taxes, including the questions on theoretical inconsistency of deferred taxes with the concepts of assets and liabilities. The unresolved problems include the deferred tax depreciation procedure which is not regulated by the Russian accounting standards. In its turn, IFRS ascribes this procedure to the competence of the specialists who actively apply the method of creation (restoration) of valuation allowance for opportunistic purposes, which increases the importance of research in this area. The results of this work are useful for a wide range of experts specializing in the theory and practice of financial analysis, accounting and tax accounting and auditing and can serve as a basis for overcoming contradictions in the practice of deferred tax accounting. The prospects of the research lie in the empirical tests confirming the informational significance of deferred taxes in the financial statements of the Russian companies. What is more, the possible areas of scientific interest are the development of the accounting methods for deferred taxes depreciation and the connection of deferred taxes with bankruptcy and the company’s financial stability indicators. The growing attention of the academic community to deferred taxes could lead to the inclusion of a deferred taxes category in a comprehensive financial analysis of business activities.

Keywords

deferred taxes, temporary differences, timing differences, deferred taxation, tax accounting, accounting, accounting gaps, asset-liability method, deferral method, deferred tax asset, deferred tax liability.

For citation

Aksent’ev A.A. Essence and classification of deferred taxes. Perm University Herald. Economy, 2021, vol. 16, no. 4, pp. 421–448. DOI 10.17072/1994-9960-2021-4-421-448

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