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Accounting
Deferred Tax Liability
A tax payment that will be due in the future because of temporary differences between accounting profit and taxable profit.
Deferred tax liabilities appear on the balance sheet and must be calculated under IAS 12 / ASC 740. They arise from timing differences (e.g., depreciation methods, warranty provisions). They do not mean the company has done anything wrong — they are simply proper accounting for future tax obligations.
It's like ordering a big meal now but only paying the bill next month — the cost is real, it's just delayed.
Real world: A company buys expensive machinery and claims fast tax depreciation. In its accounts it depreciates slowly, so it reports higher profit now but will pay more tax later. That future tax bill is recorded as a deferred tax liability.
💡 Deferred tax liability shows the tax you will eventually pay even though it isn't due yet.