Differences and Similarities between Accounting and Tax Regulations

Abstract

The relationship between accounting and taxation is shaped by their distinct objectives and regulatory requirements. Accounting aims to provide a transparent and accurate representation of an entity’s financial position, on contrast, taxation is primarily concerned with the correct assessment and collection of taxes. Due to these divergences, adjustments between accounting profit and taxable profit are often required, resulting in additional compliance and reporting obligations. However, efforts have been made to harmonize accounting and taxation through international financial reporting standards and national regulations, aiming to reduce inconsistencies and enhance financial transparency. This paper examines the main areas of convergence and divergence between accounting and taxation, focusing on the impact of legislative frameworks on financial reporting and tax obligations. Furthermore, it explores potential alignment strategies to improve consistency and compliance, ensuring a more efficient interaction between the two systems. CZU: 657:336.225.1; JEL: H30, M40