IASB publishes amendments to IAS 12 as a result of the OECD’s Pillar 2 model rules

On May 23, 2023, the IASB is­sued amend­ments to IAS 12 “In­come Ta­xes” - “In­ter­na­tio­nal Tax Re­form - Pil­lar 2 Mo­del Ru­les”. This in­tro­du­ces tem­porary re­lief in the ac­coun­ting for de­fer­red ta­xes ari­sing as a re­sult of the plan­ned im­ple­men­ta­tion of the OECD’s in­ter­na­tio­nal tax re­form.

The in­tro­duc­tion of glo­bal mi­ni­mum ta­xa­tion is in­ten­ded to en­sure that mul­ti­na­tio­nal com­pa­nies with world­wide group sa­les of more than EUR 750 mil­lion will in fu­ture be sub­ject to an ef­fec­tive in­come tax rate of at least 15 % in each ju­ris­dic­tion in which they ope­rate.

The amend­ments ad­op­ted by the IASB in­clude the in­tro­duc­tion of the fol­lo­wing re­gu­la­ti­ons in par­ti­cu­lar:

  • a tem­porary ex­cep­tion to the re­qui­re­ment to re­co­gnize de­fer­red tax as­sets and lia­bi­li­ties in con­nec­tion with OECD se­cond pil­lar in­come ta­xes,
  • dis­clo­sure re­qui­re­ments on the use of the ex­cep­tion for af­fec­ted com­pa­nies,
  • se­pa­rate dis­clo­sure of a com­pany’s ac­tual tax ex­pense (or in­come) re­la­ted to se­cond pil­lar in­come ta­xes, and
  • fur­ther dis­clo­sure re­qui­re­ments to show how com­pa­nies are af­fec­ted by mi­ni­mum ta­xa­tion, es­pe­cially in re­por­ting pe­riods in which the le­gis­la­tion im­ple­men­ting the Pil­lar 2 mo­del ru­les has not yet en­te­red into force.

The ex­emp­tion is to be ap­plied im­me­dia­tely af­ter pu­bli­ca­tion of the amend­ments to IAS 12 “In­come Ta­xes” and re­tro­spec­tively in ac­cor­dance with IAS 8 “Ac­coun­ting Po­li­cies, Chan­ges in Ac­coun­ting Esti­ma­tes and Er­rors”. The new dis­clo­sure re­qui­re­ments are ef­fec­tive for an­nual re­por­ting pe­riods be­gin­ning on or af­ter Ja­nu­ary 1, 2023. For en­ti­ties pre­pa­ring EU-IFRS fi­nan­cial state­ments, the re­gu­la­ti­ons ap­ply af­ter the cor­re­spon­ding EU en­dor­se­ment.

Due to the re­le­vance of the Pil­lar Two Mo­del Ru­les also for en­ti­ties ap­ply­ing the IFRS for SMEs, the IASB publis­hed a draft “In­ter­na­tio­nal Tax Re­form - Pil­lar Two Mo­del Ru­les (pro­po­sed amend­ments to the IFRS for SMEs stan­dard)” on June 1, 2023, in or­der to achieve align­ment with the amend­ments to IAS 12 “In­come Ta­xes”. Com­ments on the draft are to be sub­mit­ted by July 17, 2023.

Note: We re­por­ted on the de­tails of the back­ground to the amend­ments to IAS 12 “In­come Ta­xes” as well as on the glo­bal mi­ni­mum ta­xa­tion in edi­tion 1/2023 of no­vus IFRS. The IASB’s press re­lease and fur­ther in­for­ma­tion are avail­able at the fol­lo­wing link: [­coun­ting-re­qui­re­ments/].

The draft con­cerning IFRS for SMEs can be found on the IFRS Foun­da­tion web­site at the fol­lo­wing link [­tent/dam/ifrs/pro­ject/amend­ments-sme-itr-pil­lar-two/ed-iasb-2023-3-sme-itr-pil­lar-two.pdf].

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