Tax liability

How it is used

Companies calculate, estimate, reduce and settle their tax liability. On the balance sheet it appears as income tax payable or current tax liability.

Example sentences

1. Higher profits this year mean a higher tax liability next spring.

2. We set aside cash every month to meet our tax liability.

Common collocations

• calculate tax liability
• reduce tax liability
• current tax liability
• settle a tax liability

Related terms

• corporate taxA tax on the taxable profits of companies, calculated on the profit for the year after allowed deductions and adjustments.
• tax returnAn official form a taxpayer submits to the tax authority, reporting income, expenses or sales for a period and calculating the tax due.
• deferred taxTax that will be paid or recovered in future periods because some income and expenses are recognised at different times in the accounts and in the tax return.
• taxable incomeThe part of income on which tax is actually calculated, after allowed expenses, exemptions and allowances have been deducted from total income.
• liabilityAn amount a business owes to others, such as suppliers, banks, employees or the tax office, which it will have to settle in the future.

More terms: Tax Filing & Compliance

• tax audit
• tax identification number
• tax evasion
• tax avoidance