Wage Conformity Book Tax Conformity - 1176 Words

Level of Book-Tax Conformity Book-tax conformity refers to a one-book system in which financial accounting income and taxable income are highly conformed. In the past decade, book-tax conformity has been a fiercely debated issue worldwide. The main issue with book-tax conformity is whether tightening the link between financial and taxable income reduces earnings management and tax avoidance activities by pressuring to increase reportable profits for the market on one side and minimize taxation balancing on the other to create a good equilibrium in listed companies. Book conformity is an institutional feature used in many European countries such as Sweden. Substantial movement in Sweden has been made in order to stay away from a one-book†¦show more content†¦The Tax System The taxes and rates of Sweden are determined by the municipalities, county councils, and the politicians in the Swedish Parliament, Riksdag. The Swedish Tax Agency (STA), known as Skatteverket, is in charge of the tax administration in Sweden. Taxes collected are used to pay for education, healthcare, the country’s defense, and public administration. Taxes are returned to the public in the form of pensions and other benefits. Sweden’s taxation system for employment income is a combination of income taxes paid by the employee and social security contributions paid by the employer. The average social security contribution paid by the employer is about 31.42%, depending on what year the individual was born. The employer must make monthly income tax and social security payments to the STA. The income tax is finalized through a yearly tax assessment the year following the income year. In April, the STA sends a self -assessment form (tax returns) to individuals. For individua ls with at least SEK 18,900, the return must be submitted to the STA no later than May 2nd. Around the middle of June, the STA will notify the individual of the results of the examination and will determine if the examination resulted in a deficiency or a refund. Swedish residents are subject to taxation on their worldwide income and capital gains. A foreign national is liable for tax if the individual is regarded as a resident in