How to treat taxation in cashflow statement


Taxation
The cash flow statement should reflect the corporation tax actually paid. Since corporation tax is typically paid some months after the financial year-end, it is reasonable to assume that the tax provided in the Statement of Comprehensive Income will not be paid until the next year. This provision will appear in the Statement of Financial Position as a current liability. It is common to take the last year tax payable to be paid in the current year.

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