The principle of fiscal neutrality: the cornerstone of the relationship between financial reporting and taxation in Belgium

Abstract

The relationship between accounting, financial reporting and taxation in Belgium is discussed in this article. The article starts with an historical overview of the development of the accounting law and the fiscal law and shows how a strong link between the two was established in the first part of this century. Together with the introduction of the accounting law in 1975, the concept of fiscal neutrality, which had to link accounting with taxation, was introduced The second part of the article explains this concept and discusses the computation of taxable income on the basis of the annual accounts in Belgium. Further, the major distortions between the accounting law and fiscal law are presented, as well as the information disclosures on corporate income taxes required in the published annual accounts. To conclude, some possible future developments are presented.