Corporate Tax Report: Analysis of Temporary and Permanent Differences

This report offers a detailed analysis of international corporate tax, focusing on the distinction between temporary and permanent differences. It begins with an introduction to corporate tax, also known as corporation tax, and its application at both global and local levels. The core of the report involves a task-based breakdown, calculating corporate tax liabilities based on given data. It thoroughly examines temporary differences, which include depreciation expenses, provisions for doubtful debts, and administrative expenses, explaining how these differences create deferred tax liabilities or assets that reverse over time. The report also investigates permanent differences, such as administrative penalties and research and development expenses, which do not result in deferred tax savings or debts. The conclusion summarizes the importance of compliance with international taxation laws, particularly for multinational corporations, and the role of managing staff in ensuring proper compliance. The report references several academic sources to support its analysis.

International
Corporate Tax

Table of Contents
INTRODUCTION...............................................................................................................3
TASK..................................................................................................................................3
CONCLUSION...................................................................................................................5
REFERENCES..................................................................................................................6

INTRODUCTION
The term corporate tax is also known as corporation tax. This can be defined as
a type of direct tax which is executed by a jurisdiction on the income of a company or
any type of legal entity. In different countries, this types of taxation are being applied at
global level as well as applied at local level also (Taylor and Richardson, 2012). The
project report is based on different aspects of this taxations. In the report calculation of
liquidation of corporate tax is done in detailed manner in accordance of given data in
brief. As well as concept of international expansion is also covered as per the
comparison of given cases.
TASK
Temporary differences: Creation of deferred tax liabilities and assets from the temporary
difference cash only be happen in case if the variation reverse themselves on the
specific future date. Thus to such extent the annual statements of final position are
anticipated to develop economic benefit in the context of company. The taxable
temporary difference are mainly the difference which are not permanent and result in a
tax payable amount in the upcoming time when ascertaining the profit before tax as the
related balance shown in balance sheet that is either settled or recovered. In accounting
year, all kind of depreciation expenses are deducted by CPA in appropriate amount
according tot the useful and actual life the assets being depreciated. It is very common
to implement5 various kind of method to calculate the amount of deprecation on tax
return which are beneficial in accelerating the depreciation in the proceeding year of the
assets life (Blaylock, Shevlin and Wilson, 2012).
Permanent differences: These difference amount do not end in deferred tax savings or
debts. Types of things that cause severe discrepancies which include Income or cost
products which are not permitted by tax law, including tax rebates for certain
investments that explicitly cut taxes. It can be defined that the permanent variation
among the taxable income and the accounting profit results in case if a revenue or cost
enter into the book but the income is never get considered on the taxable income. This
is the main reasons due to which the book and the tax value are never equal. It is
observed that the overall permanent variation would definitely outcome among the

organisation actual tax rate and the statutory tax rate. Thus those expenses which are
determined in the annual statements will never gets deductible within the income tax
returns (Hanlon, Krishnan and Mills, 2012).
Temporary Differences: Reason
1 . Excess of tax over book
depreciation expenses:
(7000 - 52000*12%)
-760 This is temporary difference
as this expense can be
revered in subsequent year.
2. Depreciation on transport
element/ Vehicle
NA In this cash there is no
difference arise in
depreciation of vehicle as
no specific rate has been
given for amortisation 2.
method of decreasing digit
numbers
3. Provision doubtful debt -1250 Provision is based on
projection so no reliable
basis available as well as
no legal obligation here so
this expense is regarded as
temporary difference.
4. Administration Expenses 10000 Administration expense is
ordinary business expense
so this is regarded as
temporary difference.
5. Assortment of products to
employees
400 This is a type of
advertisement and
promotion expense not
considered as extraordinary
expenses.

6. Instalment payments -4400 This is simply deductible
expense so it is temporary
difference (Tang and Firth,
2012).
Permanent Differences
6. Provision for insolvencies 3000 This not a ordinary
provision as it is an
obligation which has been
already judicially claimed.
7. Administrative penalty 600 Penalties are non reversible
in nature so this is regarded
as permanent difference.
8. R & D expenses -1200 This extraordinarily
expenses as well as non
reversible thus classified as
permanent difference.
6390
Tax @30% 1917
CONCLUSION
From above study it has been analysed that International Corporate Tax is wider
aspect which deals with compliance of taxation laws and policies. For multinational
corporation, compliance of international taxation and law is essential to build trust of
investors. For listed corporation avoidance of tax compliances can lead to penalties and
fines. Managing staff are key personnel who are responsible for proper compliance of
different taxation policies and laws.

REFERENCES
Books and Journals:
Taylor, G. and Richardson, G., 2012. International corporate tax avoidance practices:
Evidence from Australian firms. The International Journal of Accounting, 47(4),
pp.469-496.
Blaylock, B., Shevlin, T. and Wilson, R.J., 2012. Tax avoidance, large positive
temporary book-tax differences, and earnings persistence. The Accounting
Review, 87(1), pp.91-120.
Hanlon, M., Krishnan, G.V. and Mills, L.F., 2012. Audit fees and book-tax
differences. Journal of the American Taxation Association, 34(1), pp.55-86.
Tang, T.Y. and Firth, M., 2012. Earnings persistence and stock market reactions to the
different information in book-tax differences: Evidence from China. The
International Journal of Accounting, 47(3), pp.369-397.