What if IFRS were a Tax Base? New Empirical Evidence from an Austrian Perspective

Eva Eberhartinger and Margret Klostermann

Accounting in Europe, 2007, vol. 4, issue 2, 141-168

Abstract: In particular in Germany and Austria, but also in other countries, extensive theoretical and analytical research has been published on the potential tax effects should International Financial Reporting Standards (IFRS) be used as the basis for corporate taxation. Very few quantitative papers exist. This motivated us to conduct a study that quantifies the actual effects of a potential decisiveness of IFRS for the national tax base -- without further questioning the usefulness of an IFRS relevance. Our paper extends existing research substantially. The research question of our paper deals with the measurement through simulation of differences in the discounted tax burden in various scenarios. Our sample comprises original data from 61 Austrian companies. The median of the difference between book values of IFRS single accounts and tax accounts for specific balance sheet items is determined. We then apply the result to the items of a typical corporate account derived from an Austrian database. As a result, depending on the term of items, we can calculate the discounted tax effects for different scenarios. It must be underlined that such highly confidential and detailed tax data is usually not available to researchers. The main preliminary finding of our empirical survey is that only in a few cases we find essential differences between IFRS and tax accounts. Our evidence suggests that no dramatic change in the tax base is to be expected. Our study provides not only new empirical evidence but also a basis for further research on a possible common consolidated corporate tax base from an academic perspective.

Date: 2007
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Citations: View citations in EconPapers (16)

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DOI: 10.1080/17449480701727932

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