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IASB issues IFRIC Interpretation 21: Levies

 20 May 2013


The International Accounting Standards Board has today issued IFRIC Interpretation 21: Levies, an Interpretation on the accounting for levies imposed by governments.  The Interpretation had been developed by the IFRS Interpretations Committee (‘the Interpretations Committee’), the interpretative body of the IASB.

The Interpretations Committee was asked to consider how an entity should account for liabilities to pay levies imposed by governments, other than income taxes, in its financial statements.  The principal question raised was about when the entity should recognise a liability to pay a levy.

IFRIC 21 is an interpretation of IAS 37 Provisions, Contingent Liabilities and Contingent Assets.  IAS 37 sets out criteria for the recognition of a liability, one of which is the requirement for the entity to have a present obligation as a result of a past event (known as an obligating event).  The Interpretation clarifies that the obligating event that gives rise to a liability to pay a levy is the activity described in the relevant legislation that triggers the payment of the levy. 

The Interpretation includes guidance illustrating how the Interpretation should be applied.  IFRIC 21 is effective for annual periods beginning on or after 1 January 2014.


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