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The Connection between Accounting and Taxation: The most practical one in relation to accounting harmonization!
Jönköping University, Jönköping International Business School.
Jönköping University, Jönköping International Business School.
2005 (English)Independent thesis Advanced level (degree of Magister), 10 points / 15 hpStudent thesis
Abstract [en]

The harmonization of accounting among the member states of the EU has been going on since the late 1960s. In 2001 it was decided that all listed groups within the EU should use the accounting standards IAS/IFRS issued by the International Accounting Standards Board in their consolidated accounts from 2005. All countries are also free to allow use of IAS/IFRS in individual accounts as well if they want to, which would be a step towards further harmonization. The use of these standards imply a changed way of accounting, adapted to provide relevant information to the capital market instead of the traditional continental European use of the prudence concept of conservatism to protect creditors.

The use of these new standards creates problems in relation to the Swedish connection between accounting and taxation which implies that the financial accounting is the base for taxation. To continue to use this connection while introducing IAS/IFRS in individual accounts would have effects on the tax base as there will be a risk of distribution of untaxed profits and having to pay tax on unrealized profits. Therefore the purpose of this thesis is to investigate how the most practical connection between accounting and taxation in Sweden should be formulated within the near future in relation to the use of IAS/IFRS and the development of accounting harmonization within the EU.

To gain relevant data to be able to fulfill our purpose we have chosen a qualitative method. We have conducted four semi-structured interviews with five interviewees knowledgeable in accounting and taxation. The data retrieved through the interviews have been analyzed by the use of data reduction in matrixes.

Our overall conclusion is that the connection between accounting and taxation needs to be changed. The most likely and suitable solution in the near future would be to keep the connection where the accounting is used as a base for taxation and remove the connection where tax rules affects the accounting. We advocate a use of IAS/IFRS in individual accounts for larger companies and that potentially arising issues due to the kept connection will be solved with specific tax rules. We do not deem complete disengagement with development of a new tax rule system to be a usable solution at the moment. Furthermore, we cannot see any signs of accounting harmonization among SME:s within the near future.

Place, publisher, year, edition, pages
2005. , p. 79
Keywords [en]
IAS, IFRS, harmonization, accounting, taxation
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hj:diva-216OAI: oai:DiVA.org:hj-216DiVA, id: diva2:3919
Uppsok
samhälle/juridik
Examiners
Available from: 2005-08-10 Created: 2005-08-10

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Citation style
  • apa
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More styles
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