Book-Tax Difference、Earnings Management And Income Tax Avoidance

Accounting and taxation are two important areas of economic activity.Accounting constitutes the foundation of taxation,taxation,in turn,has a profound effect on accounting.With the deepening of accounting reform and tax reform in China,the separation of accounting and tax laws is inevitable,at the same time,book-tax-difference provides space for firm’s earnings management and income tax avoidance,therefore,the administration of corporate income tax faces considerable challenges.What is the impact of the book-tax-difference?What are their respective impact degree?How will the tax administration respond?What is the reference for future income tax management and risk prevention?All the questions above should attract the attention of tax authorities.Based on the accounting standards for business enterprises and enterprise income tax law,this paper explains the concept of book-tax-difference,discusses accounting-tax mode in China,and then analyzes the influencing factors of book-tax-difference.Firstly,from the institutional perspective,the differences in income,deduction of expenses,and asset measurement of accounting standards and tax regulations are combed out.Secondly,from the perspective of earnings management,the paper expounds the causes of earnings management and the relationship between earnings management and book-tax-difference,and puts forward that non-listed companies might run earnings management,and then further enlarge the gap between accounting profits and taxable income.Finally,based on the tax avoidance theory and the statistical analysis of the annual income tax returns,the reasonable suspicion of the correlation between tax avoidance and book-tax difference is put forward.Using the data of the year 2009-2015 of the enterprise of the local tax bureau,the effect of institutional factors,earnings management and tax avoidance on book-tax-difference is empirically examined.Our study suggests that operating income,asset impairment preparation,investment return,and employee compensation of the institutional factors have a significant effect.Earnings management not only exists in non-listed companies,but also has a positive effect on book-tax-difference.Moreover,the existence and expansion of book-tax-difference are closely related to tax avoidance.Further,after the regression of the sample according to the property and applicable tax rates,the institutional factors are still significant,and period expenses varies considerably between different properties and different tax rates,especially for management expenses.All these results suggested above provide theoretical and practical guidance for the management and risk control of income tax.