The analysis of accounting and taxable profit: Evidence from firms indexed on MBI10

Year 2016, , 991 - 999, 01.07.2016

Fitim Deari Rufi Osmani

https://doi.org/10.24289/ijsser.279041

Abstract

The purpose of this study is to examine the accounting
versus taxable profit for selected firms. Totally nine firms are examined for
the period 2010-2014. Selected firms are indexed on Macedonian Stock Exchange Index -
MBI10 and belong to different industry sectors. Selected firms are the most
liquid on Macedonian Stock Exchange, have better business performance and
financial statements are prepared in accordance with IAS and IFRS. The analysis
is focused on effects of additional fiscal costs (firm income tax) to net
profit (loss). The analysis argues that despite the fact that formally
Macedonia ranks among the countries with lower fiscal burden of 10% tax
(personal income tax and profit tax), the level of real fiscal cost is much
higher and very asymmetric. This
additional fiscal cost and this fiscal asymmetry is the result of the fact that
the law on profit tax in whole or part taxed in additional way 25 types of
operating expenses which are considered irrelevant; and even these costs exceed
the minimum limits set by the government of the country. In the case of
Macedonia, fiscal provisions of the law on profit tax affect illogically
situations that even firms operate with loss they should pay income tax; and
consequently, this increase the business loss on one hand and decrease the
economic and financial performance on the other hand.

Keywords

Accounting Profit, Taxable Profit, Financial Performance, Listed Firms

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