Corporate taxes
This query is : Resolved
megha agarwal
(Querist)
24 May 2014
what are corporate taxes?? what is the treatment of these taxes in cash flow statement?
Vineet Kumar Sharma
(Expert)
25 May 2014
Corporate taxes is the tax levied by the government on the income earned by the body corporates. For example, in India, the corporate tax rate is 33.99% on domestic companies. In US, it is ~40%.
Treatment of Corporate Taxes in Cash Flow statement (Indirect Method):
Under Cash Flow from operating activities, you are required to add back the provision for taxes in 'Net income after taxes'; and deduct the amount of corporate income tax paid.
Cash Flow from Operating Activities:
Net Income after taxes
(+) Provision for Taxes
(-) Corporate Income Tax Paid
Treatment of Corporate Taxes in Cash Flow statement (Indirect Method):
Under Cash Flow from operating activities, you are required to add back the provision for taxes in 'Net income after taxes'; and deduct the amount of corporate income tax paid.
Cash Flow from Operating Activities:
Net Income after taxes
(+) Provision for Taxes
(-) Corporate Income Tax Paid
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