Tax proof and intercompany operations

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Leo
Posts: 537
Joined: 05 Apr 2020, 22:31

Tax proof and intercompany operations

Post by Leo »

Hi guys,

I'd like to ask one idiot question :

Company A and Company B belong to Groupe A.

Company A recorded a sell of 100€ to company B

The P&L of FY21 of Company A is : Revenue : 100, current Income Tax (30%) -30 and net result 70.
The P&L of FY21 of Company B is : Charges : -100, net result -100.

at the group level, the intercompany operations are eliminated, the consolidated statement is the following : Income tax : -30, net result -30.

the tax proof of the consolidated statements would be :

profit before tax : 0
Theorical rate : 30%
Theorical income tax : 0

????????

Current income tax : -30

I'm never seen a category named intercompany elimination in any of the tax proofs.

WHat's your thought? what I did wrong?

Thanks
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Marek Muc
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Location: Warsaw, Poland
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Re: Tax proof and intercompany operations

Post by Marek Muc »

Did Company B regonise def tax asset for the carryforward of unused tax loss?
https://ifrscommunity.com/knowledge-bas ... ax-credits
Leo
Posts: 537
Joined: 05 Apr 2020, 22:31

Re: Tax proof and intercompany operations

Post by Leo »

What will be the presentation of the tax proof if they did and what if they didn't?

Thanks :)
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Marek Muc
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Location: Warsaw, Poland
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Re: Tax proof and intercompany operations

Post by Marek Muc »

if they do, you will have group's net income at 0 and tax at 0 as expected

if they don't, you'll need to explain the difference on effective tax rate, but it doesn't really matter that this was an intercompany transaction, you need to explain that one of the entities incurred tax loss but didn't recognise def tax asset and explain why it didn't
Leo
Posts: 537
Joined: 05 Apr 2020, 22:31

Re: Tax proof and intercompany operations

Post by Leo »

Make perfect sense, thanks again !

If they do, the tax proof of company A would be :

PBT : 100
Theorical income tax : -30
Current income tax :-30

Company B would be :

PBT : -100
Theorical income tax : +30
Differed tax on profit loss : +30

The consolidated tax proof would be :
PBT : 0
Theorical income tax : 0

current income tax : -30
Differed tax : +30

nothing to explain in the tax proof.

If they didn't, the tax proof of company A would be :

PBT : 100
Theorical income tax : -30
Current income tax :-30

Company B would be :

PBT : -100
Theorical income tax : +30
Loss not recognized : -30
Current income tax : 0

ANd the consoldiated tax proof would be :

PBT : 0
current income tax : 0

Loss not recognized : -30

current income tax : -30
JRSB
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Joined: 01 Mar 2020, 01:10
Location: UK

Re: Tax proof and intercompany operations

Post by JRSB »

Useful.
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