Subject. This article examines the industry practices of the regulation of deferred taxes in financial institutions. Objectives. The article aims to analyze the significance of deferred taxes for financial institutions (banks, insurance organizations) and determine the role of tax effects in regulatory capital. Methods. The research is speculative. For the study, I used the dialectical method of scientific knowledge, the method of collecting theoretical and regulatory information, the method of formalization, as well as analysis, synthesis, observation, and comparison. Results. The article finds that the preventive nature of the accounting revaluation of deferred tax assets controls the probability of their recovery at the expense of future taxable profits, and therefore they should be included in the regulatory capital. It determines that a full reversal of the active deferred tax position is possible if the accounting assets generate income with the profitability necessary to cover the deductible temporary differences in excess of the balance sheet valuation of the assets. Conclusions and Relevance. At present, the theoretical basis of deferred taxation continues to remain undisclosed. Deferred taxes are an artificial information construct that refines the measurement of assets at fair value. Deferred taxes alone are not able to generate cash flow, they reconcile the tax flow with the financial flow in relation to the fair value of assets in order to show how much value the assets will generate taking into account the current tax situation. The results of the study can be useful to practitioners in the field of deferred tax accounting and banking management, as well as analysts and researchers whose activities are focused on accounting, taxation, and other persons concerned who study the theoretical and financial aspects of deferred taxes.
Junqueira M.A.D.R., Nakao S.H. The Role of Deferred Tax in the Regulatory Capital of Brazilian Financial Institutions. Revista Contabilidade & Finanças, 2013, vol. 24, no. 63, pp. 195–205. URL: Link
Skinner D.J. The Rise of Deferred Tax Assets in Japan: The Role of Deferred Tax Accounting in the Japanese Banking Crisis. Journal of Accounting and Economics, 2008, vol. 46, iss. 2-3, pp. 218–239. URL: Link
Eastman E.M., Ehinger A.C., Meegan C.M. Regulatory Capital and Deferred Tax Assets. 2022. URL: Link
Gallemore J. Deferred Tax Assets and Bank Regulatory Capital. September 2012. URL: Link
Gee M.A., Mano T. Accounting for Deferred Tax in Japanese Banks and the Consequences for Their International Operations. ABACUS, 2006, vol. 42, no. 1, pp. 1–21. URL: Link
Guia L.D., Dantas J.A. Value Relevance of Deferred Tax Assets in the Brazilian Banking Industry. Revista Contabilidade & Finanças, 2020, vol. 31, no. 82, pp. 33–49. URL: Link
Chytis E., Koumanakos E., Goumas S. Deferred Tax Positions under the Prism of Financial Crisis and the Effects of a Corporate Tax Reform. International Journal of Corporate Finance and Accounting, 2015, vol. 2, iss. 2, p. 38. URL: Link
Sözbilir H., Kula V., Baykut E. A Research on Deferred Taxes: A Case Study of BIST Listed Banks in Turkey. European Journal of Business and Management, 2015, vol. 7, no. 2. URL: Link
Aksent'ev А.А. [The impact of deferred taxes on the market value of Russian banks]. Mezhdunarodnyi bukhgalterskii uchet = International Accounting, 2022, vol. 25, iss. 9, pp. 1033–1070. (In Russ.) URL: Link
Ladas A.C., Negkakis C.I., Samara A.D. Accounting Quality Deferred Tax and Risk in the Banking Industry. International Journal of Banking, Accounting and Finance, 2017, vol. 8, iss. 1, pp. 1–19. URL: Link
Schrand C.M., Wong M.H.F. Earnings Management Using the Valuation Allowance for Deferred Tax Assets under SFAS No. 109. Contemporary Accounting Research, 2003, vol. 20, iss. 3, pp. 579–611. URL: Link
Hanna J.D., Li Z., Shaw W. Banks' Deferred Tax Assets During the Financial Crisis. Review of Quantitative Finance and Accounting, 2019, vol. 53, pp. 527–550. URL: Link
Aksent'ev А.А. [The theory of deferred taxation: Evidence of its applicability and conceptual framework]. Vestnik Tomskogo gosudarstvennogo universiteta. Seriya: Ekonomika = Tomsk State University Journal of Economics, 2022, no. 60, pp. 141–169. (In Russ.) URL: Link