Deferred Tax
Short definition
Deferred tax books the future tax effect of temporary differences between IFRS profit and the tax base. It is not a cash in- or outflow; it is timing.
Detailed explanation
A DTA implies future tax saving, a DTL future tax payment. An NOL DTA inflates without evidence of usable profit.
In valuation, test how much of the DTL is real cash and how much can be deferred indefinitely. Goodwill and some exemptions do not create a DTL.
Why it matters for the CFO
Net-debt and equity covenants change with how they count deferred tax. Reading a DTA as cash inflates liquidity.
How to read it
A DTA is valuable only if the firm can produce taxable income. Use period and inflation break fair value.
Related calculators
Güven Sayılgan’s writing on this topic
What Is a Real and Sustainable Tax Shield?
A real and sustainable tax shield is the cash tax saving that is legally deductible, actually usable given the firm’s capacity to pay tax, timed correctly, and
6 min read
Read → FinansChallenges in Determining Company Value in Türkiye
In Türkiye, company valuation becomes more complex because of inflation, interest-rate and exchange-rate uncertainty, limited access to sector data, and an unde
3 min read
Read →Read these first
Related terms
What to learn next
Definitions are educational. They are not investment, credit or tax advice.