Accounting profits, tax profits and unitary taxation (revisited)

Unitary taxation requires the adoption of a set of rules that enables a combined group tax profit base to be determined. Setting aside questions as to which entities should be included and how the resultant profit should be allocated to relevant jurisdictions, this article focusses on the question of what is an appropriate base, and whether accounting principles, in particular external financial reporting principles, are fit for this purpose. The authors contribute to the ongoing debate on this issue, now even more salient in relation to the digital economy and the "unified approach" proposed by the OECD, by considering more recent changes in both financial reporting and taxation. The article concludes that there is considerable preparatory work to be done before an appropriate base for unitary taxation can be developed, if that is even possible.