Module I· Deferred Taxes (DTA/DTL)Basic
Question
What are deferred taxes, and why do they arise?
Answer
What
They arise from temporary differences between the book value (local GAAP/IFRS) and the tax-base value. They reverse in the future → so you recognize the tax effect today.
Two types
DTA (asset)
Book value < tax base, or a loss carryforward → future tax savings.
- Example: loss carryforward 100 × 30% = DTA 30
DTL (liability)
Book value > tax base (e.g. faster tax depreciation) → future tax burden.
- Example: asset 100 (book) vs. 80 (tax) → 20 × 30% = DTL 6
In the model
Other long-term assets/liabilities. ΔDTA/DTL flows through the effective tax rate into the income statement.