Deferred taxes calculation data processing
Introduction¶
The deferred taxes calculation data processing operates on the original scenario and can be run as two different sub-data processes.
| Data Processing | Description |
|---|---|
| Entity data processing | Data processing run on amounts and entity journals |
| Group consolidation data processing | Data processing run on the consolidation journals |
For each tax, the system determines the list of accounts sensitive to tax and their “taxability/deductibility” percentage, thus determining the taxable base on which to apply the tax rate. If this percentage is zero for an account, then the account is not considered to be sensitive to tax.
The percentage used for the calculation of taxes on a certain account is the result of the following formula:
taxable / deductible % * tax rate %
The data processing calculates the deferred taxes separately for all the taxes associated with the fiscal policy of the entity being processed. In particular, it calculates the tax impacts of the following elements:
- data of the scenario to be processed
- any change in the tax rate between the scenario to be processed and the carry forward scenario
Tax calculation on journals¶
Data related to journals are read and processed on the basis of the Tax calculation method specified in the header of the journal itself.
| Calculation method | Description |
|---|---|
| None | The taxes calculation is not performed for that journal. |
| Entity 1 | The taxes on the journal are calculated on the basis of the rates under the fiscal policy of the primary entity, or the Entity for the entity journals and Entity 1 for the consolidation journals. The output account corresponding to the debit sign is used. |
| Entity 2 | Only for consolidation journals. The deferred on the journal are calculated on the basis of the rates under the fiscal policy of the dependent entity, or the Entity for the entity journals and Entity 2 for the consolidation journals. The output account corresponding to the debit sign is used |
| Entity 1 -Invert credits/debits | The taxes on the journal are calculated on the basis of the rates under the fiscal policy of the primary entity, or the Entity for the entity journals and Entity 1 for the consolidation journals. The choice between the “Debits for deferred taxes” and “Credits for prepaid taxes” accounts is inverted: debit sign for debits and credit sign for credits. |
| Entity 2 -Invert credits/debits | Only for consolidation journals. The deferred on the journal are calculated on the basis of the rates under the fiscal policy of the dependent entity, or the Entity for the entity journals and Entity 2 for the consolidation journals. The choice between the “Debits for deferred taxes” and “Credits for prepaid taxes” accounts is inverted: debit sign for debits and credit sign for credits. |
| None - Permanent OCI | Value for information purposes only. The tax calculation is not performed. |
| None - Permanent P&L | Value for information purposes only. The tax calculation is not performed. |
For journals in which the Invert credits/debits option is selected, the calculation is identical to the one performed for the “Entity 1” and “Entity 2” methods, but the choice between the “Debits for deferred taxes” and “Credits for prepaid taxes” accounts is inverted. If the amount has the debit sign, the “Debits for deferred taxes” account is chosen, otherwise the “Credits for prepaid taxes” account is chosen.
IMPORTANT: the deferred taxes calculation of a journal generates new rows within the journal itself.
The choice between the “Debits for deferred taxes” and “Credits for prepaid taxes” accounts to be used to generate the deferred taxes of the scenario to be processed is made on the basis of the sign of the total tax amount.
| If... | Then... |
|---|---|
| the amount has the debit sign. | the “Credits for prepaid taxes” account is chosen. |
| the amount has the credit sign. | the “Debits for deferred taxes” account is chosen. |
The debit sign is indicated in configuration in the Accounting classes signs property from theDebit: positive or negative field (see Account dimension settings).
The entity or consolidation journals subject to the deferred taxes calculation can represent a write off of what is inserted in the financial statements as they constitute adjustments of financial statement data and can therefore have the opposite sign to the standard signs. For this reason, it may be necessary to invert the choice between the Debits for deferred taxes and Credits for prepaid taxes accounts.