Implementation of NAB I-50: Deferred Tax and Exchange Rate Differences Excluded from Taxation at a Selected Company

This diploma thesis examines the implementation of Interpretation I-50, “Deferred Tax and Exchange Rate Differences Excluded from Taxation,” issued by the Czech National Accounting Board. The primary objective is to analyze the accounting and tax implications of the elective regime for excluding unrealized exchange rate differences from the corporate income tax base. The theoretical section provides an overview of the relevant legislative framework of Czech accounting regulations, the conceptual shift in the fiscal treatment of exchange rate fluctuations, the definition of exchange rate differences, and methods for currency risk mitigation. Particular attention is devoted to deferred tax and the professional recommended procedure for its recognition in accordance with Interpretation I-50. The practical section identifies temporary differences between the accounting and tax carrying amounts of foreign currency-denominated receivables and payables, which, upon application of the exclusion regime, constitute a basis for deferred tax. Furthermore, the study analyzes the impacts on the financial statements and the total tax liability under various exchange rate development scenarios of the accounting currency. The thesis concludes with a methodological framework for the accurate accounting recognition of deferred tax assets and liabilities in compliance with Interpretation I-50.