Importance The article addresses the long-standing debate of the Anglo-American accounting school representatives about the economic substance of income tax: whether it is an expense, a loss, a profit distribution, or an unusual item. Objectives The purpose of the study is to find out the nature of corporate income tax and consider the main viewpoints of the Anglo-American accounting school on the substance of income tax. Methods The study employs general scientific methods of examination, like analysis and synthesis, induction and deduction, comparison and logical generalization. Results The findings show that the best viewpoint on the economic substance of income tax is presented in the approach, under which the income tax is a specific item of financial statements. The common assumption about the income tax being the expense for the period was officially formalized in the U.S. in 1944; however, it was not properly proved. Conclusions and Relevance The existing point of view, according to which the income tax is treated as an expense for the period, was adopted at the legislative level, though without extensive discussion. Thus, today the officially recognized point of view is debatable.
Keywords: corporate income tax, loss, profit distribution, expense, deferred taxes
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