IASB issues amendments to IAS 12 to provide temporary exception to the requirements from accounting
IASB issues amendments to IAS 12 to provide temporary exception to the requirements from accounting
The IASB has issued amendments to IAS 12 International Tax Reform – Pillar Two Model Rules.
In December 2021, the Organisation for Economic Co-operation and Development (OECD) published its Pillar Two model rules to ensure that large multinational companies would be subject to a minimum 15% tax rate. Stakeholders raised concerns about the uncertainty over the accounting for deferred taxes arising from the implementation of the rules and expressed an urgent need for clarity, given the imminent implementation of these rules in a number of jurisdictions. In response to stakeholders’ concerns, the IASB has issued amendments to IAS 12 Income Taxes.
The amendments provide the following:
- Introduction of a temporary mandatory exception to the accounting for deferred taxes arising from jurisdictional implementation of the Pillar Two model rules. An entity is not required to or permitted to recognise or disclose information about deferred tax assets and liabilities related to Pillar Two income taxes. The entity is required to disclose the fact of application of the exception.
- Targeted disclosure requirements to help investors better understand a company’s exposure to income taxes arising from the reform, particularly before legislation implementing the rules is in effect.
The requirement to apply the exception and to disclose the fact of application of the exception is effective immediately and retrospectively in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
Other disclosure requirements are effective for annual reporting periods beginning on or after 1 January 2023. An entity is not required to provide these disclosures for any interim period ending on or before 31 December 2023.
The amendments may be accessed here.
For more on the above, please contact your local BDO representative.