Inflation, Inflation accounting and Tax Justice

Document Type : Original Article

Authors

1 Professor, Department of Accounting, Faculty of Economics, Management and Social Sciences, Shiraz University, Shiraz, Iran

2 Ph.D. Student, Department of Accounting, Faculty of Administrative Sciences and Economics, Isfahan University, Iran

10.22034/iaas.2021.145157

Abstract

The goal of this research is to study how tax justice improvement is considered in financial statements preparation and calculated accounting income by inflation effects decreasing or write-off. In order to do this research methodology used in this research is a deductive-descriptive method which is confirmed by literature study to have access to the best strategy of decreasing inflation effects on accounting income. Studies show that horizontal justice as the most important dimension of tax justice is affected by accounting income distortion because of inflation effect. According to investigations two strategies are suggested to inflation effects decreasing or write-off. First, specific inflation effect decreasing accounting procedures and the other one is to utilizing inflation accounting system. Studies indicate that adjusted current cost system is the best system for general price level variation. However, studies hold that according to Iranian tax regulations, firms have to report their income on the basis of historical cost and non of the two suggested strategies are not allowed to report tax income and horizontal justice will not achieved afterward. Finally, studies indicate that if tax system does not get adjusted because of inflation, no access to tax justice will appear and firms’ wrong valuation will be occurred.    

Keywords

Accounting and Auditing Studies
Volume 10, Issue 40
January 2022
Pages 27-46

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