Deferred taxes within Income Tax deductions

Abstract

This article addresses the application of deferred taxes as a fundamental principle of accounting. Deferred taxes reflect the temporary differences between the accounting basis and the tax basis of assets and liabilities. Companies that adopt IFRS for SMEs recognize and record these differences, which enhances the accuracy and transparency of their financial statements. The purpose of this research is to analyze the deferred taxes established in the IFRS for SMEs and the income tax deductions set forth in Nicaraguan tax legislation, delving into the contextualization of the recognition and measurement of deferred taxes, and distinguishing the annual income tax deductions subject to deferred taxes. The results showed that 24 provisions of Article 39 of the Tax Coordination Law (LCT) give rise to permanent differences, as the response to these provisions was negative. Consequently, these expenses must be recorded solely as part of current tax, and the differences are reflected in the tax reconciliation. Furthermore, this supports the view that every difference between accounting and tax regulations must be properly identified and recorded, as their recognition enables users of financial statements to make informed decisions.