DOI: https://doi.org/10.36719/2789-6919/46/114-117
Elvin Masizadeh
Azerbaijan State Economic University
Master student
https://orcid.org/0009-0004-7679-2777
nselvin578@gmail.com
Definition of Deferred Tax, Problems it Creates, its Solutions and Opportunities it Presents
Abstract
Deferred tax refers to amounts that are not included in tax calculations in the current period but will be subject to tax in future periods. This situation arises from temporary differences between accounting and tax practices. Deferred taxes are included in financial statements as deferred tax assets and liabilities. Tax liabilities represent taxes to be paid in the future; tax assets represent tax advantages to be obtained in the future.
One of the main problems encountered in deferred tax practices is the complex structure of the system. The fact that companies make calculations by estimating their future financial situations brings with it uncertainties and risks of incorrect evaluation. In addition, frequent changes in tax legislation and differences in accounting standards between countries may lead to incompatibilities in deferred tax calculations.
To solve these problems, transparent and consistent accounting systems that comply with international financial reporting standards (e.g. IFRS or GAAP) should be used. In addition, it is of great importance that financial analysts and auditors specialize in this subject and receive regular training.
A properly implemented deferred tax system offers various advantages to businesses. This system ensures that future tax burdens are planned more accurately and financial statements are more realistic and reliable. It also helps investors access more accurate information and maintains the company's long-term financial stability.
Keywords: deferred, accounting, tax, investor, accountability