The Difference And Its Coordination Of Present Accounting Standards And Enterprise Income Tax Law In China

In recent years,to meet the needs of economic globalization and domestic reforms,China has speeded up its reform process of accounting and taxation systems. On February 2006,the Ministry of Finance issued the brand-new accounting standards,and on March of the following year,the National People's Congress passed the People's Republic of China's Enterprise Income Tax Law.The enactment and implement of these rules have brought great changes to the original accounting-tax relationship,therefore requires thorough and systematic research on this issue.This paper proceeds from the cause of accounting-tax differences,further discusses the specific forms of these divergences,analyzes the necessity for coordination and arrive at some suggestions of coordination in the end.More specifically,we first demonstrate the objectivity and inevitability of the differences based on the analysis of present socioeconomic environment in China and the comparison of objectives and principles between accounting standards and income tax law.Then we divide these differences into removable group and non-removable group according to their different characteristics.On this basis,we further analyze the specific differences in the aspects of income,pre-tax deduction and assets disposition. And then we demonstrate the necessity and urgency for difference coordination by analyzing the ill-effects caused by undue divergences.In the end,we propose a general guideline and some concrete measures for difference coordination.Generally speaking,we believe both accounting standards and income tax law are both aimed at promoting the socioeconomic development,which provide a common interest foundation for these two sets of rules.To achieve this objective,it is necessary to bring the market mechanism into full play,therefore,the revision of these rules should conform to the law of market economy.Given the fact that accounting reform usually goes ahead of taxation reform in China,we think accounting standards are more commensurate with the market economy spirit than tax law in general.Therefore,on the premise of guarantee fiscal revenue,the primary way to arrive coordination lies in income tax law's active approaching towards accounting standards.Besides,it is also important to reinforce the communication among policy makers and to involve the policy performers into the coordinate course.Moreover,it is necessary to take distinct measures to deal with different divergence categories.The removable ones can be eliminated in the way of rules convergence,while the non-removable ones can be tackled with in some indirect ways,such as refining the tax-related information disclosure,simplifying the tax-return form,etc.,these measures are all expected to be able to alleviate the negative impacts brought by excessive differences.