The Research On Income Tax Accounting Policy Choice

Since the reform and opening policy of China, more and more foreign-invested enterprises and foreign enterprises come to China. They bring increasingly amount of investment to China as well. At the same time, we also have more and more businesses overseas, due to the development of our country. For the demand of international capital market and adapting the international accounting standard, it is essential to converge to the International Accounting Standard. Give the same transaction to the same accounting treatment and report all over the world, and let the investor know the information of corporations ,which from different countries, and make a directly, timely comparison. It will not only enhance the transparency of the companies, but also could help reduce the operating cost. So, we should accelerate our country's accounting internationalization, of course, accounting internationalization including income tax internationalization.In 2007, China will carry out a new income tax standard, the new standard rules that the income tax method must adapt to balance sheet liability method of income tax .The balance sheet liability method of income tax pay more attention to handling and disclosure of temporality differences, so it can afford more information for decision making. Further, with the development of economic , merger ,acquisition and reorganization service increasingly day by day , it engender a lot of temporality differences, which deferred method or profit and loss statement could not handle. At this time, we adopt balance sheet liability method of income tax could fully and perfectly reflect the computing and payment processes of income tax , also afford more useful information.According to Watts and Zimmerman's contract theory, analyses the factors which impact the select of income tax method. Firstly, analyses the contract theory, process history of income tax, all methods of income tax fully through theory , and then analysis to payment contract, debt contract, political cost contract and China's own shell resource through practical. After that we get the results that debt contract and shell resources have obvious influence to the choice of income tax method.