Computation of Taxable Business Profits

Why this book?

Each state that levies taxes on business profits faces the inevitable challenge of deciding how to compute these profits. With both individual entrepreneurs and companies obligated by commercial law to ascertain annual profit or loss, the key question emerges: to what extent, if at all, should the calculation of taxable business profits adhere to commercial accounting rules?
While the response to this question may differ, mirroring the diversity of domestic tax systems, this book strives to unveil shared normative patterns and fiscal policy rationales outlined in the 25 national reports it contains. Crucially, it also contemplates the most significant deviations from these established patterns.
Additionally, the book delves into four overarching issues: (i) the underlying rationale behind the book-tax conformity principle; (ii) the EU law dimension of the topic; (iii) the prospective role of book-tax conformity within the internationalization initiatives of corporate taxation (Pillars One and Two, BEFIT); and (iv) procedural aspects governing the interplay between accounting and tax law. These topics align with the thematic reports featured in the book, forming the foundation for discussions at the 2023 EATLP Congress hosted at the University of Luxembourg.

This book attempts to answer two simple questions: do governments link the calculation of taxable business profits to the profit or loss resulting from applying accounting rules? Moreover, does it make sense to do so? The detailed responses to these two questions are provided in the general report and the 25 national reports that form its foundation. Additionally, the book analyses various cross-cutting aspects of the topic, including its constitutional dimension, its intersections with EU law, its prospects in recent initiatives for the internationalization of corporate taxation and its procedural implications.