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effective v/s statuatory rate?

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › effective v/s statuatory rate?

  • This topic has 2 replies, 2 voices, and was last updated 4 years ago by Stephen Widberg.
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  • April 9, 2021 at 2:49 pm #616575
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    sir what are some of the reasons why effective rate is different from statutory rate?

    deferred tax? under or over provisions? are these some of the likely reasons?

    April 9, 2021 at 2:51 pm #616576
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    basically we will be answering this question in the same way as we’ll be answering a question asking why taxable profits are different from accounting profits.

    so both of them will have similar reasoning, isnt it ?

    April 10, 2021 at 1:32 pm #616657
    Stephen Widberg
    Keymaster
    • Topics: 16
    • Replies: 3411
    • ☆☆☆☆☆

    UK example:

    PBT 100
    Add back fine disallowed for tax 20
    Taxable profit 120

    Tax @19% = 22.8

    Effective rate = 22.8 / 100 x 100 = 22.8%

    So, yes, because of permanent and temporary differences

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