CFA Practice Question
Reasons for variations in tax rates for similar companies would be all of the following except
A. different statutory tax rates in different jurisdictions, and tax holidays that some countries offer.
B. differences in taxable income.
C. permanent differences between financial and taxable income.
Explanation: Differences in taxable income alone would not vary tax rates for similar companies.
User Contributed Comments 7
| User | Comment |
|---|---|
| KD101 | Why not? if we have current progressive tax structure --> higher income higher the marginal tax rates |
| jayjunk | I think for corporations it is a flat rate, not progressive. |
| jackwez | corporations are progressive. |
| pdubyac | Fair point, KD101. C is still the best answer, as it *could* be incorrect, as the other choices are all definitely correct. |
| mary11 | Taxable income is how much you pay in takes - Tax expense is from your income statement and based on the tax rates. |
| Procbaby1 | Taxes Payable is how much in pay in taxes. |
| fobucina | I think by looking at A and C you can deduce that B refers to temporary differences. Temporary differences do not impact a company's effective tax rate, whereas permanent differences do. |