Provision for Tax Formula

Provision for Tax Formula

A provision for tax is required bases on the accounting profit. Actual tax calculation may be differed from the provision.

Provision for tax =Tax Rate x Accounting Profit

Example

Accounting Profit = 120,000

Tax rate = 30%

What would be the provision for tax?

Solution

Provision for tax =Tax Rate x Accounting Profit

= 120,000 x 30%

=36,000 (Provision for tax)