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Hello sir, question most of time mention that corporate taxes are payable in the year that the tax liability arises. What does this statment means? Explain it please. Thankyou.
It means that if there is a taxable profit in the first year of (say) 10,000, and the tax rate is 30%.
Then the tax payable if 3,000 and it is payable at time 1.(If tax is payable with a 1 year delay (which is quite common in the exam) then the 3,000 would be an outflow at time 2).
It will help you to watch our lectures, and if needed the F9 lecture on Investment appraisal with taxation (because it is revision of F9).
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