Analysis of the Financial Management and Business Performance Implications of Income Tax Accounting Policy

Abstract

Introduction. Amid economic instability, an increasing tax burden, and changing legislation, developing an effective accounting policy that optimises tax liabilities is crucial. Accounting policy in forming corporate income tax is a multifunctional tool that allows for taking into account tax risks, increasing financial transparency, and facilitating the development of an effective strategy for managing costs and financial resources.

Aim and tasks. This study examines the theoretical, practical, and legal aspects of income tax accounting policy to develop a model for determining the corporate income tax base and assess its impact on financial management and business performance.

Results. A model for forming an accounting policy aimed at determining the corporate income tax base based on the instruments of the tax system and accounting has been developed. The model ensures a balanced tax burden, compliance with state requirements, and legitimate tax reduction through an optimal choice of accounting methods. The structure of the regulatory framework is presented, and the impact of accounting policy on income tax revenues on Ukraine's budget and the state's fiscal stability is analysed. Although macroeconomic fluctuations significantly affected tax revenues (particularly the decline in 2022), the model contributed to a 34.3% increase in revenues to the state budget of Ukraine (+845.8 million euros) from 2019 to 2023. The most substantial growth was recorded in 2021 (+35.9%), coinciding with the active application of elements of the optimised accounting policy. This indicates the model's ability to adapt to a favourable economic environment and maximise the tax potential of enterprises.

Conclusions. The structure of the legal framework for accounting policy ensures increased transparency of accounting processes and efficiency of income tax administration in compliance with key accounting and taxation principles. Implementing this structure allows not only the elimination of inconsistencies between accounting and tax standards but also the development of a unified methodological approach to determining the corporate income tax base. The introduction of a model for accounting policy will allow the optimisation of tax obligations while ensuring transparency and legality in interaction with tax authorities.