New Accounting System To Study The Differences In Corporate Income Tax System

Enterprise income tax has changed from a unified pattern with accounting to a separate one. In 1983 when we started to tax on the earnings of enterprise, there is no difference between pretax profit and taxable income. The promulgation of PRC Enterprise Income Tax Provisional Regulations in 1994 has officially differentiated pretax profit and taxable income. With the improvement of market economic system and integration of global economy, our accounting system has been in line with the international conventions gradually. Meanwhile, our income tax system has received an unification of the domestic and foreign enterprise income tax. The separation of the two systems is the outcome of economic development, which suits the actual condition of the nation and brings us challenge as well. Theorists never stop the study of the variances bought by the separation. Every time when a reformation takes place, either accounting system reformation or tax system, it disappears the original variance or creates new ones. This thesis mainly focuses on two subjects. One is the new Accounting Standard for Enterprises which was put into practice on 1st Jan 2007 and the other is the New Enterprise Income Tax Law which will be came into effect on 1st Jan 2008. Analyze their difference, study the variance and make a comparison are the content of this thesis.This thesis contains four parts. The arrangement of this article is from theory to practice, from general to specific.Part one is mainly focus on the academic study. It first discusses the basis of the variance between accounting system and tax system. Then it introduces the Caraniski Rule which explains the essential difference between government's tax exacting and investor's reward, and exposes the unavoidability of the difference between tax and accounting. At last, theoretical difference between the two systems has been discussed from three aspects. They are purpose, basic premise and principles.Part two states the traits and significance of the new enterprise income tax law and the new accounting standard for enterprises. It introduces the current tax system and accounting system in practical point of view. "Change" is the bedrock of this part, whether in the analysis of the new enterprise income tax law or in the new Accounting Standard forThe third part is the core of this paper. The purpose of this paper is to analyze the variance between the new accounting system and the new income tax system, concentrate on new variance. From the analysis of the new accounting standard for enterprises in part two, the applications of fair vale and time vale in the new standard are the biggest difference from the old one. They are reflected in different specific accounting standards. In the same way, this part is separated into two, one is the fair vale pattern, and the other one is the time vale pattern. The analyses of each variance are in accordance with the classification of accounting standard.Part four makes a brief summary and conclusion of the variance between accounting and tax. It is necessary to keep an appropriate and moderate variance. They should promote each other while they have developed respectively. Meantime, the minimization of the unnecessary difference is required which lead to a reduction of financial cost and tax cost.