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What does deferred taxation mean?

December 20, 2010


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Deferred taxation is a method that allocates tax expenses to the respective financial period. Accounting conventions require that tax expenses presented in the yearly financial statements reflect the tax attributable to that year, regardless of the actual amount of tax paid. The reason for this is that tax liability in one financial year may be paid in another year, because there are differences between the way activities are included in accounting profit and taxable profit.

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