Friday, July 7th, 2023
The International Accounting Standards Board (IASB) has announced amendments to IAS 12 Income Taxes, providing temporary relief for companies from the accounting for deferred taxes in light of the Organisation for Economic Co-operation and Development’s (OECD) international tax reform.
In December 2021, the OECD introduced the Pillar Two model rules to enforce a minimum 15% tax rate for large multinational companies. This reform has been agreed upon by over 135 countries and jurisdictions, representing more than 90% of global GDP.
In response to stakeholder concerns about accounting uncertainty due to these rules, the IASB has made timely amendments to:
Companies can adopt the temporary exception immediately, but the new disclosure requirements apply to annual reporting periods starting from 1 January 2023.
IASB Chair, Andreas Barckow, stated that the amendments, developed in response to stakeholder feedback, support companies during the OECD’s rules implementation while enhancing financial information provided to investors about the impact of international tax reform. The IASB is observing developments as jurisdictions adopt the Pillar Two model rules. It has added a future maintenance project to its pipeline to revisit the temporary exception and related disclosures.
The Board is also working on a separate project contemplating potential amendments to the IFRS for Small and Medium-sized Entities (SMEs) Accounting Standard related to the OECD tax reform.
To gain a comprehensive insight into the recent changes announced by the IASB, we invite you to participate in our IFRS Update Courses