Tax facts
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Tax facts
Companies' reported earnings could be hit dramatically if plans being considered to change the rules on accounting for tax are adopted.
The changes put forward in Accounting for Tax, published by the Accounting Standards Board last week, would lead to many companies having to make substantial provisions, and see their ability to borrow reduced.
Companies based in Britain now take a "partial provision" approach to tax charges, under which deferred tax is provided for to the extent that it is likely to be payable, taking into account the tax effects of likely future transactions. But American and international standard setters have adopted "full provision" - which requires tax to be fully provided for in accounts.
This has been criticised, as it can lead to the build-up of large liabilities that may not be due for a long time. However, the board favours mitigating this by discounting at the effective rate of a goverment bond.
A third option, "flow through", under which no provision is made for deferred tax, is unlikely to be adopted, chiefly because it creates too much volatility in accounts.
Comments should be sent to the ASB by 16 June.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments