ETR
Effective Tax Rate
Short definition
The effective tax rate is tax expense over pre-tax profit. It is not the statutory corporate rate; exemptions, disallowances and deferred tax create the gap.
Detailed explanation
The cash tax rate is tax paid over taxable (or EBIT) and differs from ETR. WACC and NOPAT need a sustainable cash tax; a single-year ETR can sit low on an exemption or a loss carry-forward.
Deferred tax moves ETR without moving cash. Transfer-pricing and thin-cap adjustments push ETR above the statutory rate.
Why it matters for the CFO
If valuation and debt capacity lock “25% tax” while true cash tax is 10% or 35%, FCF is wrong.
How it is calculated
ETR = vergi gideri / vergi öncesi kâr
The numerator is IFRS tax expense (current + deferred). Cash tax needs a separate bridge.
Variables in the formula
- ETR: effective tax rate
How to read it
ETR below statutory is exemption or carry-forward; above is disallowance. A single year is not sustainable T.
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Definitions are educational. They are not investment, credit or tax advice.