The discrepancy between accounting income and tax income and its impact on the quality of the financial statements (Applied research in the General Tax Authority)

Abstract

The discrepancy between accounting income and tax income, due to several factors, including the dependence
on the accrual basis for preparing corporate financial statements. While the cash basis is adopted in determining the
taxable income, and the extent to which this discrepancy affects the quality of the financial statements. Therefore, the
importance of the research lies in knowing the effect of this discrepancy on the amount of tax for the research sample
company. The research problem concluded with the inconsistency between the accounting methods used when preparing
the financial statements and the tax laws, which affects the quality of the financial statements. Thus it affects the amount
of the tax, to prove the research problem, the research relied on the hypothesis that the discrepancy between accounting
income and tax income affects the quality of the financial statements.The research aims to identify the accounting income
and tax income, and the effect of the difference between the two incomes on the quality of the company's financial
statements, to prove the research hypothesis, the study and analysis of the company's financial statements for the
research sample for the year 2017 was relied on. The researchers reached a set of conclusions and recommendations. The
most important of them is that the surplus according to the assignments statement (accounting income) appears in an
amount that differs from the new surplus after adding the rejected expenses (tax income).Therefore, researchers
recommend the necessity of creating a legal ground that contributes to reducing the discrepancy between the accounting
and tax income, by making amendments to the applicable tax laws and instructions.