For countries whose tax standards are closely tied to financial reporting standards (Continental Europe and Japan),accounting earnings tend to be lower so companies can minimize tax payments.

Question

Quizplus · Accepted Answer

It is generally true that in countries where tax standards are closely tied to financial reporting standards, companies tend to report lower earnings in order to minimize tax payments. This is because tax laws often provide incentives for companies to reduce their taxable income, and financial reporting standards offer certain options that can be used to lower reported earnings. In some cases, companies may engage in aggressive tax planning strategies that involve shifting income to low-tax jurisdictions or using complex financial instruments to reduce their taxable income.

For Countries Whose Tax Standards Are Closely Tied to Financial