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1
THE IMPACT OF APPLYING INTERNATIONAL ACCOUNTING STANDARDS
ON THE TAX BASE: AN APPLIED STUDY OF A SAMPLE OF BANKS LISTED
ON THE IRAQ STOCK EXCHANGE
Mustafa Talaat Talib Al-Taweel
1
Houda BenMabrouk
2
ABSTRACT
Objectives: The study aimed to examine how international accounting standards affect the
taxable base of Iraqi banks listed on the Iraq Stock Exchange.
Methods: A stratified purposeful sample of 33 participants was selected, including top
management from financial departments of the National Bank of Iraq, Commercial Bank of Iraq,
and Bank of Baghdad, as well as accountants and auditors. Data was collected using a
questionnaire and analyzed through SPSS software.
Results: The findings indicated that accounting information provides essential financial and
accounting data necessary for calculating income, expenditure, and profits for tax purposes.
This data enables government agencies to estimate the tax base more accurately. Furthermore,
financial transparency and reporting include disclosing changes in tax rates compared to the
previous accounting period. Specific international accounting standards, including Standards 9,
12, 15, 16, 21, and 36, were found to significantly influence the taxable base of the banks.
Conclusion: The study concluded that banks should develop deferred tax asset and liability
management strategies to reduce deferred tax impacts on financial statements and improve
performance. Additionally, banks should periodically review and adjust their accounting and
tax practices to comply with local legislation and international accounting standards,
particularly in the areas of financial instruments, income tax, revenue recognition, fixed assets,
and exchange rate changes.
Keywords: stock exchange, banks, tax, Sustainable Development Goals (SDGs).
1 INTRODUCTION
It is essential to reevaluate the harmonization of accounting principles
used by banks in accordance with the regulations of the tax legislation that
govern the collection of taxes from these businesses' income in light of the
changes wrought upon the Iraqi accounting system by the implementation of
1
Faculty of Economic Sciences and Management in Sfax, University of Sfax, Tunisia.
E-mail: mostafa.t.altaweel@gmail.com
2
University of Sousse, Tunisia. GFC Laboratory, University of Sfax, Tunisia.
E-mail: houda.benmabrouk.ihecs@gmail.com
Received: Aug/16/2024
Accepted: Oct/18/2024
DOI: https://doi.org/10.47172/2965-730X.SDGsReview.v4.n04.pe03555
SDGsReview | Florida, USA | VOL. 4| e03555| pag: 01-21| 2024.
Last name, name of the author. (2024). Job title
2
Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
worldwide accounting standards at the accounting and financial levels (Li,
2024). It was essential to implement worldwide accounting standards to
enhance the quality of accounting information given to different user groups in
order to resolve the discrepancy between taxable profit and accounting profit,
which is undoubtedly caused by this disparity. According to Bel Abbes and
Boutalby (2022)} However, the tax base is the extent to which taxable income
or wealth is defined; governments make sure all taxes are fairly and effectively
based on the revenue, income, and financial wealth that they generate by
precisely determining the tax base (Hakkaraki, 2023).
1.1 THE PROBLEM
With the application of international accounting standards in Iraqi
banks, an important problem arises related to the results of the application on
determining the tax base, as calculating income tax was and still is of interest
to all specialists in the tax and accounting fields, and this interest has increased
with the entry into force of the financial accounting system, which necessitated
the need to reconsider the relationship between accounting and tax, and
accordingly it becomes clear that the accounting treatment of income taxes
related to the tax institution is of great importance(Pernul & Fuchs, (2010).
Based on the above, the features of the research problem are evident, which
can be focused on the following main question:
"What is the effect of applying international accounting standards in
determining the taxable base in banks listed on the Iraq Stock
Exchange?"
1.2 IMPORTANCE
The importance of the research stems from considering the increasing
importance of international accounting standards, and trying to reconcile these
concepts in different environments, through knowing how and how to employ
and adapt them in a manner that is consistent with their application and
benefiting from the possibility of interaction between accounting and taxation,
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Last name, name of the author. (2024). Job title
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
which helps in the possibility of measuring and determining the tax base, and
this may lead to an increase in tax revenues by adapting the tax system in Iraq
to these standards, which may create an investment environment that
encourages foreign companies to invest, which contributes to improving tax
revenues and thus positively reflecting on the state's general budget.
1.3 OBJECTIVES
1. Identify the extent to which banks in Iraq apply international accounting
standards (9-12-15-16-21-36);
2. Clarify the impact of these standards in determining the taxable base in
Iraqi banks, the research community.
1.4 HYPOTHESES
1. Hypothesis (1): The combined worldwide accounting standards and
taxable base for study sample banks have a considerable influence;
2. Hypothesis (2): Standard No. 9 and the taxable base affect banks in the
research sample significantly;
3. Hypothesis (3): Standard No. 12 and the taxable base affect banks in the
research sample significantly;
4. Hypothesis (4): Standard No. 15 and the taxable base affect banks in the
research sample significantly;
5. Hypothesis (5): Standard No. 16 and the taxable base affect banks in the
research sample significantly;
6. Hypothesis (6): Standard No. 21 and the taxable base affect banks in the
research sample significantly;
7. Hypothesis (7): Standard No. 36 and the taxable base affect banks in the
research sample significantly.
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Last name, name of the author. (2024). Job title
4
Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
2 BACKGROUND TO THE STUDY CONCEPTS
2.1 THE CONCEPT OF INTERNATIONAL ACCOUNTING STANDARDS
Standards were defined by the International Accounting Standards
Committee as: A high-level professional description of accounting practices as
they represent rules and guidelines that professionals rely on to support their
opinions and judgments, and it also aims to reduce the degree of difference in
similar practices. These standards are considered a general framework for
raising the efficiency and quality of technical work and determining the nature
of responsibility. (Khalaf; and Kandori, 2020, p. 178)
The concept of the tax base: The tax base can be defined as the
material, money, or person subject to tax, with the necessity of specifying the
time period for it, which may be annual, quarterly, six-monthly, or upon
harvesting, according to what is determined by the prevailing tax system in the
country. (Al-Kafeef, 2016, p. 111).
2.2 THE IMPORTANCE OF INTERNATIONAL ACCOUNTING STANDARDS
The importance of international standards lies in their ability to provide
a set of principles that must be derived in accounting and during financial
disclosures of events and operations, unlike the principles followed by the
United States of America in preparing its financial statements, which provide
management with greater flexibility and discretion. The aim of adopting these
standards was to obtain uniform accounting standards in all countries. (Aniza;
Radhi, 2022, p. 86).
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Last name, name of the author. (2024). Job title
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
3 METHODS OF ESTIMATING TAXABLE INCOME
3.1 INDIRECT ESTIMATION METHODS: ACCORDING TO THIS METHOD, THE
TAXABLE ITEM IS ESTIMATED THROUGH SEVERAL INDICATORS
● External appearances method: The taxable income is determined by
relying on some external appearances of the taxpayer, but relying on
these appearances leads to not knowing the real income, which causes
injustice to some taxpayers. (Abu Bakr, 2012, p. 113);
● Arbitrary estimation method: The value of the taxable item is estimated
arbitrarily based on evidence of the taxpayer's income. The difference
between this method and the previous one is that the element is directly
related to wealth or taxable income (Boutalaa; and Bou Kahil, 2015, p.
98)
3.2 DIRECT ESTIMATION METHODS
● Tax declaration method: It is a written statement submitted by the
taxpayer annually to the tax department on a specific date, announcing
the results of his work during the past year. The taxpayer is obligated to
submit it to the tax administration along with the final accounts signed
by the auditor. (Abu Bakr, 2012, p. 114);
● The agreed-upon estimation method: It is the estimation made on the
taxpayer's income included in the income tax report he submitted, and
in coordination between him and the estimator and based on the
information (quotes) included in his statement, an agreement is reached
on the final estimation of his income. (Ahmed; and Hamad, 2015, p. 151);
● The reserve estimation method: That is, the financial authority estimates
the taxpayer's income as a temporary, non-final estimation with the aim
of ensuring that the tax amount is obtained until the final estimation is
made. (Ahmed; and Hamad, 2015, p. 151);
● The administrative estimation method: In this method, the tax
administration relies on itself to estimate the taxable item, and has
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
complete freedom to collect evidence, proof and data to reach the
taxable item, in order to discuss it with the taxpayer. (The Blind, 2017,
p. 113).
The impact of IFRS 9 on income tax: Financial instruments are
classified into categories based on their cash flow pattern and the business
model in which they are managed. This classification affects how financial
instruments are measured and expected credit losses are estimated. These
changes affect profits and losses, and therefore the tax basis. There may also
be differences between how expected credit losses are calculated in accounting
and how tax authorities deal with them, and thus differences between taxes
paid and declared tax expenses. (Wiley, 2021)
The relationship of IAS 12 to income tax: The standard discusses
deferred tax assets and the mechanisms for calculating and entering them into
the financial statements, deferred tax liabilities, revaluation of assets, and
current and future tax rates and percentages expected to be paid or due in the
future. It also discusses temporary differences and revaluation differences and
how they arise. All of the above directly affects the taxable income achieved
by companies in their financial statements and thus affects the amounts paid
as income taxes and thus the tax revenues achieved from income for
companies. (Salman, 2014, p. 33)
The impact of applying IFRS15 on income tax: The application of
IFRS15 leads to a set of tax effects, including accelerating revenue recognition,
and thus an immediate impact on cash flow, displaying all data related to
revenue for the tax period, and recognizing value-added tax on all transactions.
Deferred tax assets may also arise, leading to a reduction in the company's
future tax burden. (Abdul-Baqi, 2021, p. 15)
The impact of applying IAS 16 and IAS 36 on tax revenue: As per the
requirements of IAS 16, it is necessary to conduct regular and suitable reviews
of the asset's depreciation method, productive life, and residual value. Any
changes that arise from these reviews must be reflected in the income
statement for the period in which they took place. Although the inclusion of a
loss does not impact an institution's cash flow because it does not generate any
cash payments or receipts, the text of IAS 36 states that if certain internal or
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
external indicators indicate that an asset's value has declined, the decline must
be recognized. However, the result of the cycle in which the loss occurred is
reduced because operating expenses are increased. The source cited is
Kimouche (2014), specifically pages 9 and 10.
The impact of applying IAS 21 on tax revenues: To provide an accurate
view of the unit's financial situation, financial statements—particularly the
balance sheet and income statement—detail the effects of changes in foreign
exchange rates, and IAS 21 addresses how these effects should be recorded in
financial statements (Al-Saedi; and Nidal, 2022, p. 332) The application of this
standard is considered an initiative to direct tax work towards a direction based
on future visions looking forward to a distinguished level of tax work. (Hassan;
and Ahmed, 2023, p. 2).
4 PREVIOUS STUDIES
Study (Al-Naghi, and Asghar, 2021): This study set out to answer the
question, "How effective are international financial reporting standards in
enhancing the openness and credibility of economic entities' financial
statements?" by looking at how widely used these standards are. Several Iraqi
businesses from various economic sectors were chosen to represent the study
community, and a descriptive technique was adopted. After collecting 135 valid
forms for analysis, the researcher used the SPSS statistical tool to examine the
data. According to the research, Iraq is trying to adopt international accounting
standards, but it's moving at a snail's pace because of all the problems that a
lot of public and private organizations encounter when trying to adopt these
standards. There has been a sea change in the banking industry as a whole in
Iraq to conform to international accounting norms.
Study (OYEWOBI, Ifeoluwapo A, 2020): Financial instability, defined
as the ever-increasing level of government expenditure, was the focus of this
research, which sought to understand how it affected Nigeria's public sector's
adoption of international accounting standards. Using stratified random
selection, 253 accountants from the Ministry of Finance in Plateau and
Nasarawa states made up the sample. We used questionnaires to gather data,
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Last name, name of the author. (2024). Job title
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
and then we used descriptive statistics to make sense of it all. International
public sector accounting standards are impacted by financial instability,
according to the research. Not to mention the fact that the government may
not be able to implement it. Based on the study's findings, the government
should consider expenditure controls necessary to make the adoption of
worldwide public sector accounting standards a reality. Academic research
(Allawi, Khudair, et al., 2020): In view of recent shifts in the economic
landscape, this research set out to assess how the adoption of uniform
worldwide accounting standards has altered the value of accounting.
Specifically, the question of how nations' accounting values change as a
consequence of adopting international accounting standards is the research
topic. Accounting continues to adapt to new issues, transactions, and changes
in social and environmental situations via the process of establishing and
developing accounting standards, according to the study's conclusion.
Study (Yamani, 2018): The purpose of this research was to identify the
three types of tax bases and how the adoption of international accounting
standards by the Kingdom of Saudi Arabia affected them. According to the
findings, which were derived from an inductive analysis, the majority of
participants in the survey do not believe that the income tax system in the
Kingdom of Saudi Arabia has to be compatible with worldwide accounting
standards.The study recommended conducting this comparison, but on the basis
of a sufficient sample of income statements for a number of taxpayers to know
the resulting differences between the base calculated on the basis of
international accounting standards and the base calculated according to the
income tax system.
4.1 COMMENT ON PREVIOUS STUDIES
Many studies have been conducted to evaluate the impact of adopting
international accounting standards on several areas such as attracting
investments and the stock market, but the studies that addressed the impact
of these standards on the tax base were limited. Therefore, our study aims to
study this impact on Iraqi banks listed on the Iraq Stock Exchange.
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Last name, name of the author. (2024). Job title
9
Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
4.2 RESEARCH METHODOLOGY
The Approach Followed: The researcher relied on the descriptive
analytical approach because it is capable of helping the researcher to explain
the concept and importance of international accounting standards, while
identifying the accounting and tax effects when applying them from the
theoretical side. And on the practical side, by using a questionnaire form to
analyze the results of the questionnaire distributed to the financial
administrative staff of the banks in the research community.
Study Community: The researcher studied the National Bank of Iraq,
Bank of Baghdad, and Commercial Bank of Iraq, which use international
accounting standards to prepare their financial statements.
Study Sample: The researcher relied on the stratified intentional
sample in his study, as he limited himself to the senior management of the
financial department of the three previous banks in addition to the accountants
and auditors in them, whose total number reached 41 individuals. The final
sample number reached 33 individuals, divided as follows:
Table 1
Job title distribution of research sample members
Tota
l
National Bank of
Iraq
Bank of
Baghdad
Commercial Bank of
Iraq
Sample Job Title
12
5
4
3
Accountant
7
5
2
3
Auditor
2
1
0
1
Financial Analyst
3
1
1
1
Audit Manager
3
1
1
1
Assistant Audit
Manager
3
1
1
1
Accounts Manager
3
1
1
1
Assistant Accounts
Manager
3
1
1
1
Financial Manager
3
1
1
1
Assistant Financial
Manager
33
17
12
13
Total
As for the distribution of individuals according to their years of service,
it is as follows:
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Last name, name of the author. (2024). Job title
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
Table 2
Division of the research sample according to years of job service
Years of
service
Less
than 5 years
5 to 10
years
More
than 10 years
T
otal
8
19
6
3
3
4.3 DATA COLLECTION METHODS
1. The first method: The data used to form the theoretical chapter from
sources related to the research topic and data issued by the Central Bank
of Iraq and decisions related to the study variables;
2. The second method: To increase the reliability of the theoretical results,
the opinions of the senior management concerned with the financial
department in the banks of the research community were taken, in
addition to accountants and auditors through an opinion questionnaire
that included questions about the selected criteria, the extent of their
application, and how they affect the tax base.
Statistical processing: To test the research hypotheses, the researcher
relied on the results of the questionnaire extracted from the SPSS statistical
program.
Validity of the questionnaire: The researcher provided the
questionnaire to many arbitrators listed in the appendix to confirm its validity.
After they approved its content, it was taken and given to the study sample.
He also conducted several statistical tests to prove this, including the
Cronbach's alpha test for reliability, as the questionnaire is considered
acceptable if the coefficient is greater than 0.66 for all paragraphs, the results
of which were as follows:
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Last name, name of the author. (2024). Job title
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
Table 3
Questionnaire reliability
Paragraphs
Number
Alpha
X1-X4
4
0.725
X5-X8
4
0.751
X9-X12
4
0.779
X13-X16
4
0.684
X17-X20
4
0.745
X21-X24
4
0.756
X25-X29
5
0.747
X1-X29
29
0.894
The researcher used statistical data.
Table 4
Questionnaire descriptive analysis
Questions related to Standard No. 9
Mean
Std. Dev.
X1
The standard provides a measurement of the amount of impairment losses in
asset values
4.21
0.650
X2
Losses resulting from impairment of financial instruments are treated in the
bank
4.18
0.635
X3
The bank provides a forward-looking view that ensures a more accurate
assessment of the expected losses in a timely manner
4.09
0.805
X4
The bank relies on the estimation element in calculating expected credit
losses
4.15
0.795
X1-X4
4.16
0.537
Questions related to Standard No. 12
Mean
Std. Dev.
X5
The excess of amounts paid for income taxes due and past are recognized as
current assets
3.85
0.712
X6
Unpaid taxes for the current and preceding periods are liabilities.
3.91
0.723
X7
The bank measures current tax obligations and assets at the projected
payment or recovery using tax rates and legislation at the balance sheet date
4.00
0.559
X8
Deferred tax expenditure from temporary tax rate adjustments is disclosed
by the Bank
3.76
0.830
X5-X8
3.88
0.415
Questions related to Standard No. 15
Mean
Std. Dev.
X9
The standard provides a comprehensive accounting treatment for both non-
cash consideration and consideration payable to a customer
4.06
0.556
X10
Based on the bank's performance and customer payments, the standard
covers financial reporting contract presentation criteria
3.94
0.659
X11
The standard examines customer contract revenue and cash flows' type,
quantity, timing, and unpredictability
4.03
0.728
X12
When a bank meets a customer performance requirement, the standard
guides revenue recognition
3.97
0.728
X9-X12
4.00
0.446
Questions related to Standard No. 16
Mean
Std. Dev.
X13
Reviewing the asset's depreciation method at the conclusion of each financial
year
4.21
0.415
X14
If expectations differ materially from previous estimates, the depreciation
charge for the current period and subsequent periods is adjusted
4.15
0.712
X15
The projected pattern of economic benefits flow determines the
depreciation technique, which is implemented frequently.
4.06
0.556
X16
If further investments enhance productive life, performance, or product
quality, they are added to the fixed cost of the asset
3.94
0.747
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Last name, name of the author. (2024). Job title
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
X13-X16
4.09
0.446
Questions related to Standard No. 21
Mean
Std. Dev.
X17
The bank must report currency discrepancies in its annual net profit or loss
4.12
0.696
X18
The bank is obligated to show exchange differences resulting from a decrease
or increase in the exchange rate within equity
4.36
0.549
X19
Non-monetary goods in foreign currency are provided using historical cost,
which was computed using the transaction date exchange rate
4.15
0.667
X20
Non-monetary items that were held are reported using fair value, which was
determined using the exchange rate prevailing when that value was
determined
4.21
0.485
X17-X20
4.20
0.453
س
Questions related to Standard No. 36
Mean
Std. Dev.
X21
At valuation date, property, plant, and equipment are valued at fair value
less depreciation or impairment
4.21
0.600
X22
Fixed asset carrying values are documented as they change
4.09
0.805
X23
Professional real estate valuers assess market value. When property, plant,
and equipment is revalued, its class must also be revalued
4.18
0.584
X24
Fixed assets are revalued when their fair value changes considerably from
their book value at least once a year.
4.21
0.485
X21-X24
4.17
0.388
Questions related to the tax base
Mean
Std. Dev.
X25
Tax burdens related to the accounting period are measured whether payable
or recoverable in subsequent years
4.12
0.600
X26
Taxable profit is recognized according to the rules set by the tax authorities
3.85
0.712
X27
The accounting information disclosed enables government agencies to
estimate the tax base
3.94
0.659
X28
The bank reports tax rate changes from the prior accounting period.
4.03
0.585
X29
Bank reveals tax expenditure owing to accounting policy changes and
fundamental mistakes in computing net profit for the period.
4.15
0.712
X25-X29
4.09
0.413
It was found that all paragraphs of the questionnaires had directions of
their answers towards approval, and what confirms this is that all the arithmetic
averages of the paragraphs were 3.76 and less than 4.20, which means that the
majority of the sample members agreed in their answers to the paragraphs
related to the application of international accounting standards.
4.4 HYPOTHESIS TESTING
1. Hypothesis (1): In this section, we check the hypothesis by
examining the connection of influence; the tables show that there is a positive,
statistically significant link of impact between the taxable base and
international accounting standards.
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Last name, name of the author. (2024). Job title
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
Table 5
Testing Hypothesis (1)
Independent
variable:
International
Accounting
Standards
R
R Square
F
Sig.
B
t
Sig.
.685a
0.469
27.363
.000b
0.634
5.231
0.000
Dependent variable: taxable income
4.5 BASED ON STATISTICAL DATA, RESEARCHER-PREPARED
The field data analysis in the table shows that foreign accounting rules
significantly affect the taxable base. The computed (F) value (27.363) and
significance level (0.002), which is smaller than the study's hypothetical
significance threshold (0.05), corroborate this impact's relevance. The
coefficient of determination (R2), which represents 46.9% of the variance,
shows that international accounting standards explain the taxable base with a
regression coefficient of (0.685) and a positive (B) coefficient (0.634).
2. Hypothesis (2): Here, the impact relationship is verified to verify
the validity of the hypothesis for the existence of a significant impact
relationship between Standard No. 9 and the taxable base:
Table 6
Testing Hypothesis (2)
Independen
t Variable:
Criterion
No. 9
R
R Square
F
Sig.
B
t
Sig.
.525a
0.276
11.801
.002b
0.403
3.435
0.002
Dependent variable: taxable income
4.6 BASED ON STATISTICAL DATA, RESEARCHER-PREPARED
The field data analysis in the table shows that criteria No. 9 significantly
affects the taxable base. The computed (F) value (11.801) and significance level
(0.002), which is smaller than the study's hypothetical significance threshold
(0.05), corroborate this effect's relevance. The coefficient of determination
(R2), which represents 27.6% of the variance, shows that criteria No. 9 with a
regression coefficient of 0.525 explains the taxable base. This is supported by
the positive (B) coefficient (0.403).
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Last name, name of the author. (2024). Job title
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
3. Hypothesis (3): In this case, we check the impact connection to see
whether our hypothesis about the taxable base and criteria No. 12 having a
substantial effect link is correct:
Table 7
Testing Hypothesis (3)
Independen
t Variable:
Criterion
No. 12
R
R Square
F
Sig.
B
t
Sig.
.404a
0.163
6.042
.020b
0.401
2.458
0.020
Dependent variable: taxable income
The researcher used statistical data.
Standard No. 12 significantly affects the taxable base, according to
field data analysis in the table. The computed (F) value (6.042) and significance
level (0.002), which is smaller than the study's hypothetical significance
threshold (0.05), corroborate this effect's relevance. The coefficient of
determination (R2), which accounts for 16.3% of the variation, shows that
Standard No. 12 with a regression coefficient of 0.404 explains the taxable
base. Positive (B) coefficient (0.401) confirms this.
4. Sub-hypothesis (4): Here, the effect relationship is verified to verify
the validity of the hypothesis for the existence of a significant effect
relationship between Standard No. 15 and the taxable base:
Table 8
Testing Hypothesis (4)
Independe
nt
Variable:
Criterion
No. 15
R
R Square
F
Sig.
B
t
Sig.
.577a
0.333
15.469
.000b
0.533
3.933
0.000
Dependent variable: taxable income
The researcher used statistical data.
Standard No. 15 significantly affects the taxable base, according to
field data analysis in the table. This impact's computed (F) value (15.469) and
significance level (0.002), which is smaller than the study's hypothetical
significance threshold (0.05), suggest its relevance. The coefficient of
determination (R2), which represents 33.3% of the variance, shows that
SDGsReview | Florida, USA | VOL. 4| e03555| pag: 01-21| 2024.
Last name, name of the author. (2024). Job title
15
Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
Standard No. 15 with a regression coefficient of 0.577 explains the taxable
base. This is supported by the positive (B) coefficient (0.533).
5. Hypothesis (5): Here, the impact relationship is verified to verify
the validity of the hypothesis for the existence of a significant impact
relationship between Standard No. 16 and the taxable base:
Table 9
Hypothesis Test (5)
Independe
nt
Variable:
Criterion
No. 16
R
R Square
F
Sig.
B
t
Sig.
.676a
0.457
26.106
.000b
0.626
5.109
0.000
Dependent variable: taxable income
The researcher used statistical data
Standard No. 16 significantly affects the taxable base, according to
field data analysis in the table. The computed (F) value (0.626) and significance
level (0.002), which is smaller than the study's hypothetical significance
threshold (0.05), corroborate this impact's relevance. The coefficient of
determination (R2), which represents 45.7% of the variance, shows that
Standard No. 16 explains the taxable base with a regression coefficient of
0.676. Positive (B) coefficient (0.626) confirms this.
6. Hypothesis (6): Here, the impact relationship is verified to verify
the validity of the hypothesis for the existence of a significant impact
relationship between Standard No. 21 and the taxable base:
Table 10
Hypothesis Test (6)
Independ
ent
Variable:
Criterion
No. 21
R
R Square
F
Sig.
B
t
Sig.
.767a
0.589
44.413
.000b
0.699
6.664
0.000
Dependent variable: taxable income
The researcher used statistical data
Standard No. 21 significantly affects the taxable base, according to
field data analysis in the table. The computed (F) value (44.413) and
significance level (0.002), which is smaller than the study's hypothetical
SDGsReview | Florida, USA | VOL. 4| e03555| pag: 01-21| 2024.
Last name, name of the author. (2024). Job title
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
significance threshold (0.05), corroborate this impact's relevance. The
coefficient of determination (R2), which represents (58.9%) of the variance,
shows that Standard No. 21 with a regression coefficient of 0.767 explains the
taxable base. This is supported by the positive (B) coefficient (0.699).
7. Hypothesis (6): The impact relationship is verified here to verify the
validity of the hypothesis for the existence of a significant impact relationship
between Standard No. 36 and the taxable container:
Table 11
Testing Hypothesis (7)
Indepen
dent
Variable
:
Criterio
n No.
36
R
R
Square
F
Sig.
B
t
Sig.
.591a
0.35
16.672
.000b
0.629
4.083
0.000
The researcher used statistical data.
The field data analysis in the table shows that Standard No. 36
significantly affects the taxable base. The computed (F) value (16.672) and
significance level (0.002), which is smaller than the study's anticipated
significance threshold (0.05), support this influence. The coefficient of
determination (R2), (35% of the variation), suggests that Standard No. 36 with
a regression coefficient of 0.591 explains the taxable base. This is supported by
the positive (B) coefficient (0.629).
5 CONCLUSION
The taxable base is a reflection of the value of assets, liabilities,
revenues, and expenses; as a result, the application of these standards impacts
the financial statements, which in turn impacts the taxable base of banks. The
International Accounting Standards Board (IASB) sets these standards, and they
are very important.
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Last name, name of the author. (2024). Job title
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
5.1 RESULTS
1. Standard No. 9 requires banks to use tools and methods to accurately
and predict future losses, which improves their ability to predict
financial challenges and shows the importance of future financial
analysis to improve decision-making, manage risk, and comply with
regulatory and legal requirements;
2. Banks' recognition of the increase in amounts paid for income taxes as
current assets enables them to improve the transparency of their
financial reports and provide a more accurate picture of their rights and
obligations, as their recognition of amounts paid for income taxes as
current assets reflects their ability to manage their assets more
effectively and use them in a manner consistent with their strategic
objectives;
3. The bank's use of applicable tax rates and laws in determining the
expected amounts to be paid or refunded enhances the bank's ability to
identify and manage tax risk effectively, which contributes to mitigating
financial shocks and achieving better stability in financial performance
through an advanced financial planning strategy and thinking ahead in
tax estimates;
4. It is critical to ensure the accuracy of the revenues generated from
contracts and the expected cash flows associated with them, and the
readiness of the banks to understand contracts with customers
comprehensively—including their nature, value, and timing of expected
cash flows—is an indication of this importance;
5. Banks' commitment to Standard 16 helps ensure that the accounting
value of assets reflects the actual value and real use of assets in the
bank's daily operations. By reviewing the depreciation method, banks can
identify any weaknesses in the management of assets and equipment,
thus reducing potential financial risks;
6. Standard 21 specifies how banks should deal with financial transactions
and items in a foreign currency using historical cost and the prevailing
exchange rate, thus enabling banks to anticipate the effects of foreign
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Last name, name of the author. (2024). Job title
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
currency transactions based on historical cost, which helps them plan
and manage financial performance better and more accurately;
7. IAS 36 deals with the decline in the value of assets, such as neglect,
technological obsolescence, or changes in markets, and that the grading
of items at fair value and the exclusion of accumulated depreciation
reflects compliance with the requirements of this standard and the
correct use of international accounting principles;
8. Accounting information includes a set of financial and accounting data
that can be used to determine the amount of income, expenditure, and
profits that may be subject to tax. Using this information, government
agencies can more accurately estimate the tax base, which can
contribute to determining the amounts due for taxes that must be paid;
9. To ensure financial transparency and compliance with reporting
requirements, it is important to disclose changes in applicable tax rates
from the previous accounting period. This disclosure helps investors and
other parties understand how these changes have affected the
performance of banks.
5.2 RECOMMENDATIONS
1. Banks should improve their risk management systems related to financial
instruments to ensure the accuracy of estimating expected credit losses.
The application of IFRS 9 requires proactive estimation of these losses,
and therefore an effective risk management system will help reduce
errors and ensure the bank’s compliance;
2. Financial institutions need to figure out how to handle their deferred tax
assets and liabilities. Reducing the impact of deferred tax on financial
statements and improving financial performance may be accomplished
via future tax planning;
3. Banks should conduct periodic valuations of tangible assets and ensure
that records are updated to be consistent with the current market value,
which helps avoid recognizing unexpected losses;
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Last name, name of the author. (2024). Job title
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
4. Emphasize full disclosure of revenue recognition policies in the financial
statements. Detailed information should be provided on the timing of
revenue recognition, and any significant changes that may affect the
income statement and financial position;
5. Clearly and comprehensively disclose the methods used to mitigate
currency risk, the effect of variations in exchange rates on financial
performance, and any discrepancies that may have resulted from
translation;
6. Banks should review and update their accounting and tax policies
regularly to ensure that they take into account any changes in local laws
or international accounting standards.
SDGsReview | Florida, USA | VOL. 4| e03555| pag: 01-21| 2024.
Last name, name of the author. (2024). Job title
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Al-Taweel, M., T., T., BenMabrouk, H. (2024) The Impact of Applying International
Accounting Standards on the Tax Base: An Applied Study of a Sample Of Banks Listed
on the Iraq Stock Exchange
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