In the light of its discussions on Presentation of Taxes or Other Charges that are Not Income Taxes within the Scope of IAS 12 Income Taxes (IFRS 18 Presentation and Disclosure in Financial Statements), for which the IFRS Interpretations Committee (Committee) decided to publish a tentative agenda decision, the Committee [decided] to not finalise but instead to propose additional updates to two of the nine agenda decisions for which it had previously proposed updates. The two agenda decisions are:
- Presentation of payments on non-income taxes (IAS 1 Presentation of Financial Statements); and
- Classification of tonnage taxes (IAS 12 Income Taxes).
New text proposed to be added to the original agenda decision is underlined and text proposed to be deleted from the original agenda decision is struck through. The Committee is asking for feedback only about the proposed updates and not about other aspects of these agenda decisions.
All comments will be on the public record and posted on our website unless a respondent requests confidentiality and we grant that request. We do not normally grant such requests unless they are supported by good reason, for example, commercial confidence.
The deadline for commenting on the proposed updates to the agenda decisions is 6 February 2026. The Committee will consider all comments received in writing by that date; agenda papers analysing comments received will include analysis only of comments received by that date.
[Draft] Updates to Committee’s agenda decisions for IFRS 18
Open for comment until 6 February 2026
Presentation of payments on non-income taxes (IAS 1 Presentation of Financial Statements and IAS 12 Income Taxes)—Agenda Papers 9–9C
Published in July 2012
Updated in [Month Year] to replace references to IAS 1 with references to IFRS 18.
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The Committee observed that the line item of ‘income tax expense or income’ ‘tax expense’ that is required by paragraph 75(a)(iv) of IFRS 18 Presentation and Disclosure in Financial Statements includes paragraph 82(d) of IAS 1 Presentation of Financial Statements is intended to require an entity to present taxes that meet the definition of income taxes under IAS 12. The Committee also noted that it is the basis of calculation determined by the relevant tax rules that determines whether a tax meets the definition of an income tax. Neither the manner of settlement of a tax liability nor the factors relating to recipients of the tax is a determinant of whether an item meets that definition. The Committee further noted that the production-based royalty payments should not be treated differently from other expenses that are outside the scope of IAS 12, all of which may reduce income tax payable. Accordingly, the Committee observed that it is inappropriate to consider the royalty payments to be prepayment of the income tax payables. Because the production-based royalties are not income taxes, the royalty payments should not be presented as an income tax expense in the income taxes category of the statement of profit or loss comprehensive income. The Committee considered that, in the light of its analysis of the existing requirements of IFRS 18 IAS 1 and IAS 12, an interpretation was not necessary and consequently decided not to add this issue to its agenda.
Classification of tonnage taxes (IAS 12 Income Taxes)—Agenda Papers 9–9C
Published in May 2009
Updated in [Month Year] to replace references to IAS 1 with references to IFRS 18.
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The IFRIC has previously noted that IAS 12 applies to income taxes, which are defined as taxes that are based on taxable profit, and that the term ‘taxable profit’ implies a notion of a net rather than a gross amount. Taxes either on tonnage transported or tonnage capacity are based on gross rather than net amounts. Taxes on a notional income derived from tonnage capacity are not based on the entity’s actual income and expenses. Consequently, the IFRIC noted that such taxes would not be considered income taxes in accordance with IAS 12 and would not be presented as part of tax expense in the statement of comprehensive income. However, the IFRIC also noted that, in accordance with paragraph 85 of IAS 1 Presentation of Financial Statements, an entity subject to tonnage tax would present additional subtotals in that statement if that presentation is relevant to an understanding of its financial performance. (See also the [Agenda Decision] Presentation of Taxes or Other Charges that are Not Income Taxes within the Scope of IAS 12 (IFRS 18)). Given the requirements of IAS 12, the IFRIC decided not to add the issue to its agenda.
Comment Letter