This research has been aimed at identifying the factors involved in the differences between declared and final taxable incomes of legal entities. The statistical population of the study consists of legal entities that have been audited during the period 2004-2005 in Hamedan township. The selected sample included 366 companies for which the significance of the differences between the declared and final taxable incomes was tested. The results show that there has been a significant difference between the two mentioned taxable incomes. The most important factor was “taxpayers’ failure to observe the Statutory Books Drawing Up By-law”. Moreover, the most important factors involved in the rejection of the statutory books are “to non-registration of one or more financial activities” (42.58%) and “the delay in sealing their books” (28.5%). In addition, in cases where the accounting books are accepted, the most important undetectable cost has been “the lack of evidence for proving the cost in question” (32%). “The discrepancy between accounting standards and tax regulations” make no significant differences in these cases.

Keywords: Declared and final taxable incomes, accounting standards, tax regulations, bookkeeping procedures

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