The corporate income tax

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The tax is considered one of the main revenues of the state, which helps it to provide services to citizens and individuals residing in the state, and the state obtains this tax directly or in another indirect way, so the tax that is imposed on individuals and on corporate profits is considered a direct tax, while the tax that is imposed on sales Goods and services are considered indirect taxes, and in this lesson and the lessons after that, the accounting treatment of the three types of taxes will be explained.
Recording income tax restrictions on corporate profits
Some countries impose a tax on corporate profits at certain rates that may differ according to the type of company or the type of activity that it carries out, and as we explained in the previous lessons, the net income before tax is extracted after deducting the expenses of the current period from the revenues of the current period, and then the estimated income tax is proven At the end of the current period, according to the tax laws in force in the country, and there are several ways to prove income tax entries, and among these methods is to register the following entries:

Accounting profit: The income tax due and estimated account appears in the statement of financial position under the current liabilities item. It is considered one of the obligations that are certain to occur and whose value is estimated.
Note: The tax expense account is not treated as an expense and is not included in the expenses.
Tax profit and accounting profit
In the next fiscal year, the company's accountant or auditor submits a statement of the income of the previous financial period and the estimated income tax value to the tax department. The tax officer studies the statement, audits and reviews the revenue and expenditure items and makes sure that they are taxable until the tax profit is reached, and before we explain the method of extracting the profit Taxable person (tax profit) The accountant must know what is the difference between accounting profit and tax profit:
It is the profit that is determined based on generally accepted accounting assets and principles, which appears in the income statement after subtracting expenses from revenues, meaning that accounting profit represents net income before tax.
tax profit:
It is the profit that is subject to tax, the value of which may differ from the value of the accounting profit due to the adjustment of the income and expense items in the income statement in accordance with the tax laws in force in the country.
Method of deriving taxable profit (tax profit):
The net accounting profit appearing in the income statement may include expenses and expenditures that are not allowed to be tax deductible, or that there are revenues that must be subject to tax and are not shown in the income statement statement, then the tax officer adjusts the net accounting profit until the company’s net income is reached. The taxable person (tax profit). It should be noted, however, that these adjustments made by the tax officer to calculate revenues and expenses are not amended in the accounting books and records. These amendments are for the Income Tax Department for the purposes of calculating the amount of tax due only, and the tax officer extracts the net tax profit by preparing The following table:

Income Tax Calculation Restrictions:
After the tax officer determines the net tax profit and the value of the tax due on the company for the previous fiscal period, the accountant then compares the estimated income tax value (recorded in the books in advance) with the due tax value (which the tax officer calculated) and records the difference. Then he has the following possibilities:

3 The estimated income tax value is equal to the income tax due:
In this case, no amending entry is recorded.
When the company pays the tax due to the Income Tax Department, the following entry is recorded:
Debtor creditor statement
From h/ income tax due
xxx to h/the fund or the bank

Pay the income tax due in cash
The income statement of Al-Amal Company on 31/12/2015 appeared as follows:
Total amount Partial amount statement

operating expenses

Administrative and general expenses
30,000 salaries and wages
3000 rent expense
500 for telephone and internet expenses
1000 Electricity expenses
1,000 for hospitality expenses
500 government fees

Other expenses
2000 bad debts
7000 Fixed assets depreciation expenses
(-) Total operating expenses
net profit before tax
In the next financial period, when the tax assessor reviews the items of revenue and expenses in the income statement, the following appears:
The salary item includes an amount of $5,000 that is not tax approved
The rental expense includes an amount of $500 paid in advance that was not approved
The value of bad debts shown in the statement was not approved
There is $1,000 in revenue that must be taxed and did not appear in the statement
If you know that the income tax rate imposed on corporate profits is equal to 10% according to the tax law.
Required :
Registration of the entry proving the estimated income tax on 12/31/2015
Determination of net taxable income (tax base)
Reconciliation of income tax account
Recording income tax payment
Solution method:
First: Registering the entry that proves the estimated income tax on 12/31/2015:
Estimated income tax = net profit before tax * 10%
25,000 * 10% = $2,500
Debtor creditor statement
From h/m.income tax
2500 to h/ income tax due

Proof of income tax estimated at 10%
Debtor creditor statement
From h/ profit and loss (income summary)
2500 to h/m. Income tax

Closing the income tax expense due
Second: In the following fiscal period, the taxable net profit (tax profit) and the income tax due are determined by the tax assessor by preparing the following statement:
Find the net taxable profit statement
25,000 net accounting profit shown in the income statement
Added to it:
5,000 salaries excluded
500 rentals excluded
2000 debts not proven to be counted

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