Accounting errors,financial information and presumption based taxation: the Portuguese case

António Martins () and Cristina Sá ()
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António Martins: University of Coimbra - School of Economics
Cristina Sá: Polytechnic Institute of Leiria - School of Technology and Management

OBEGEF Working Papers from OBEGEF - Observatório de Economia e Gestão de Fraude, OBEGEF Working Papers on Fraud and Corruption

Abstract: The purpose of this paper is to analyse the accounting and legal basis that justify the application of presumptions in the taxation corporate income.The connection between errors on recording transactions by the financial accounting system and the use of presumptions by tax authorities will be highlighted. The paper contributes to the literature by offering a systematic analysis of the criteria used by Portuguese tax courts to decide when accounting data can be disregarded by tax authorities and presumptions can therefore be used as a tax computation tool. Given that the general rule is to base taxable income on accounting records (albeit with adjustments established in Corporate Income Tax Code) presumptions are a striking exception to this well established rule. As such, tax researchers, tax authorities and taxpayers have a significant interest in knowing how do courts validate or deny tax authorities’ approach when using presumptions.

Keywords: Accounting errors; taxation and presumptions; financial fraud (search for similar items in EconPapers)
Pages: 24 pag.
Date: 2015-02
New Economics Papers: this item is included in nep-acc and nep-law
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Persistent link: https://EconPapers.repec.org/RePEc:por:obegef:034

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