The Statutory Format of Structured Financial Statements Has Limited Impact on the Profit Tax Determination and Shall Not Be Used as an Argument for Not Allowing the Voluntary Use of IFRS. Evidence from Slovakia

Objective: The objective of this research was to verify whether it is useful to proceed with financial statements in the legally ordered form to determine the profit tax. Theoretical Framework: Financial statements in Slovakia display the amount of profit tax without any information about how the tax has been determined. Method: Despite the fact that the tax rate is given by the law and the tax base is calculated from the financial profit before taxation, we have examined whether structured financial statements bear the information required to determine or verify the profit tax amount. On the random sample of publicly available financial statements from Slovakia we examined whether any of the 201 disclosed variables correlate to the profit tax and whether disclosed figures could be used to determine or verify profit tax. Results and Discussion: We have shown that requiring the submitting of official financial statements in a legally ordered structured form, has no added value regarding to profit tax. Research Implications: Profit tax determination from financial statements cannot be used as a relevant argument to require a legally ordered structured form of financial statements. Companies should be given the possibility of issuing their financial statements based on IFRS or IFRS for SMEs, if the company wishes to do so in order to better display their financial statements. Originality/Value: This research shows that legal requirements on financial statements shall be regularly evaluated whether their structure is still relevant considering technological progress, information value and effort companies, especially SMEs, must expend.