What are the effects of inflation on profits?

Companies operating in hyperinflationary economies show profits in their financial statements that are much higher than their actual profits, resulting in ‘paper’ profits which adversely affect companies,  inflating their corporate tax obligations and the profits that need to be distributed. The term "inflation tax" is used to describe the corporate tax paid by companies. Higher amounts of taxes paid and higher than normal profits distributed on paper profits may adversely affect equity levels.