• Reinaldo Guerreiro Universidade de São Paulo
  • Denis Mângia Universidade de São Paulo



FIN 48; Tax transparency; Theory of political costs


The Financial Accounting Standards Board (FASB) published the Interpretation Number (FIN) 48, with the aim to clarify the tax accounting criteria of corporate profits. By requiring greater transparency of tax positions, this interpretation has been regarded with some suspicion by the market. It has been theorized that companies may adopt less aggressive tax practices, which might result in an increased amount of tax payable on profits. On the other hand, according to the Theory of Political Costs, increasing calculated profits might draw the political class’s attention. The general aim of this paper is assessing the decision made by Brazilian companies that undergo the referred interpretation, addressing this trade-off by means of a research question: “What is the position taken by Brazilian companies when faced with the obligation to comply with the FIN 48, considering the increased risk of tax audits, from the perspective of the Theory of Political Costs?” Two hypotheses were tested concerning the impact of adopting this interpretation on the amount of taxes evidenced by a sample of Brazilian companies listed on the New York Stock Exchange (NYSE); the results showed that this interpretation does not influence the behaviour of these companies regarding the disclosure of their tax positions. Such results can serve as a prediction about the adoption of International Financial Reporting Interpretations Committee (IFRIC) 23 in Brazil.


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Artigos - Contabilidade Financeira, Auditoria e Tributação