Measuring Company Income Taxes on the Basis of IAS/IFRSs: the Italian Case

This article focuses on the relationships between accounting for financial purposes and computing income taxes in Italy today. Some peculiarities of the national rules for measuring companies’ taxable income merit attention - primarily the decision of the Italian legislator to impose (or permit) the adoption of the IAS/IFRSs (the International Accounting Standard/International Financial Reporting Standards) for the preparation of the annual accounts of many types of enterprise. Since that decision, the approach followed in Italy for regulating companies applying the IAS/IFRSs has changed. The legislator initially established a system to untie the strong historical links between taxable income and companies’ financial statements. These rules were then replaced by new regulations characterised by strong ties to the IAS/IFRSs accounting provisions. This article will discuss the reasons for this change and on the positive and negative effects of the different legislative solutions. The Author also makes some general considerations that, even if not specific to the case in question, may be of interest because they are based on practical experience.