The impact of tax differences on the financial stability of business entities

Abstract

Abstract: At any time in the development of the state, taxes always play a key role, ensuring the implementation of fiscal and regulatory functions. One of the budget-forming taxes is the corporate income tax, in the process of which tax differences may arise. Historically, Ukraine tried to introduce accounting for tax differences back in 2008, when the Tax Code of Ukraine had not yet been adopted. But at that time, this caused negative responses from business entities, because it led to an increase in taxpayers' time for conducting accounting procedures. The tax reform of the mid-2010 provided business entities with the opportunity to choose to apply tax differences in accounting for income tax, which for some taxpayers was generally an advantage, since they gained the right to account for corporate income tax only within the framework of accounting (financial) accounting, and tax accounting was implemented by them only when paying income tax and submitting a tax return. In the process of the research, the existing problems that arise during the application of tax differences were analyzed. To achieve the goal of the article, a theoretical generalization of the structure of tax differences in Ukraine was carried out, their impact on the financial stability of business entities was assessed, and key areas of reforming the process of accounting for tax differences were substantiated. In the process of scientific research, the following methods were used: theoretical generalization, systematization (to generalize the theoretical aspects of the application of tax differences), statistical and graphical methods of analysis (to reflect the impact of tax differences on the financial stability of business entities); logical justification (to substantiate the areas of improving the impact of tax differences on the financial stability of business entities). In the process of scientific research, it was found that the tax legislation does not contain the category of “tax differences”. It was found that the existing structure of tax differences is unjustified, as it can lead to situations when a person will have a profit according to the results of accounting, but will not pay income tax in tax accounting, as a result of adjusting the financial result for tax differences. It is proven that the tax reform and martial law have negatively affected business entities, as evidenced by a decrease in the proportion of enterprises that received profit. It is established that even during military operations, the tax burden increases, which negatively affects the financial stability of enterprises. The conclusions substantiate the main ways to improve the accounting of tax differences. The emphasis is on changing their structure and simplifying the accounting of tax differences for business entities. Keywords: corporate income tax, tax differences, tax burden, financial stability, depreciation, working capital, financial transactions, financial result before tax.