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The accounting and taxation relationship in Spanish listed firms

Isabel Gallego (Departamento de Administración y Economía de la Empresa, University of Salamanca, Salamanca, Spain)

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 1 August 2004

Abstract

The relationship between accounting and fiscal rules has long been controversial. Financial statements conform to accounting principles and methods regardless of tax rules. This independence generates important permanent and temporary differences between accounting and taxable income. The paper analyses the behaviour of listed Spanish firms in this accounting‐taxation relationship 1996‐1998, the extent of introduction of the inter‐period income tax allocation method, and the number and types of permanent and temporary differences reported. Most firms adopt the income tax allocation method, and report the differences, although they do not always specify which transactions provoked them. Among the long list of operations that generate differences, the most frequent are income tax expense, welfare schemes, provision for pensions, monetary correction, accelerated depreciation, or exemption for reinvestment. Although the number and kind of differences vary through time, the variation is not statistically significant. This is the first study analysing such differences for a European Union state.

Keywords

Citation

Gallego, I. (2004), "The accounting and taxation relationship in Spanish listed firms", Managerial Auditing Journal, Vol. 19 No. 6, pp. 796-819. https://doi.org/10.1108/02686900410543903

Publisher

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Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited