From Disconnected to Integrated tax and financial systems A post-IFRS evaluation of evolution of Tax and Financial Reporting relationships based on the French case

The globalization of financial markets has required the use of common reporting standards, notably the IFRS. These are impacting the accounting systems of many countries. However, accounting systems are also often used for national tax reporting. This creates a divergence in the reporting needs which existing accounting systems are unable to meet and some amount of duplication is therefore required for tax reporting and financial reporting. Previous studies have talked about linkages between accounting and taxation and have found aspects of their systems identical, disconnected, accounting dominated or tax dominated, and that this mix changes over time, with a definite evolutionary model. This conceptual paper, grounded in French empirics, examines whether since the new IFRS, the existing theoretical evolutionary model is adequate, and finds that it is not. It then proposes an alternative integrated accounting system to satisfy simultaneously the financial and tax reporting requirements. The integrated accounting system should result in economies.