Should drawdown include tax?

When calculating drawdown, we include swap and brokerage costs. What are your thoughts on including tax? Tax is an expense we pay when we have a profitable year. I haven't read any literature saying we should include tax, but it obviously causea a dip in our equity curve.

You only pay tax when you withdraw, so it doesn't affect your equity curve. Don't include tax in your drawdown, because tax requirements are different for each country whereas drawdown calculations are a universal measure of system performance. When you withdraw take the tax off then, just like tax comes off your paycheck on its journey from your employer to you.

No, taxes shouldn't be part of your drawdown stats.

While it is a cost at the end of the year (on your net profits only,) it isn't something that should be accounted for in your trading performance..

Are you sure? That would make FX accounts tax shelters for compounding investment gains.. often a feature of registered or retirement accounts, not cash/margin trading accounts.

Here in Canada, P/L is summed up at the end of the tax year and you pay a tiered rate based on capital gains, personal business income, (or interest income for swaps and interest,) depending on how you've structured your trading business and how the tax authority views your 'activity'.

Maybe, it depends on where you live. In most countries with Capital Gains Tax I think they would be happy enough if you declared it on withdrawal, since a lot of brokers are international your government won't see your account balance. I have never used a broker based in the same country as me so I don't really know how that works. What money you have in offshore accounts generally doesn't concern the government until you bring that money into the country - at least that's how my government operates. Like I said, it could be different elsewhere.
The point remains the same though - tax is not part of drawdown.