CERTYNEX IFRS ACADEMY

Dorvignac reports accounting profit of 500,000. Under tax law (case data), 40,000 of expenses are not deductible. With an enacted rate of 25%, the accountant recognises current tax of 125,000. Where is the error?

The rate: the rate in force on payment should have been applied.

The basis: tax is levied on taxable profit of 540,000, i.e. 135,000.

The principle: current tax had to be measured on accounting profit, the error lies elsewhere.

The amount: the non-deductible expenses should have been subtracted, i.e. 115,000.