The International Accounting Standards Board (IASB) has decided today to finalise amendments to IAS 12 Income Taxes following the Pillar Two model rules published by the Organisation for Economic Co-operation and Development (OECD).
The amendments, approved in a special supplementary meeting, will provide temporary relief for companies from having to account for deferred taxes arising from the implementation of the Pillar Two model rules.
The amendments will introduce:
The amendments will ensure that affected companies apply IAS 12 consistently and that investors are given better information before and after any jurisdictional Pillar Two legislation comes into effect.
The IASB consulted on the proposed amendments in the first quarter of 2023 following stakeholders' concerns about the potential implications of these rules for the accounting for income tax that is presented in financial statements. While almost all stakeholders agreed with the suggested temporary exception from having to calculate deferred taxes, they had differing views on the level of information expected from companies during the implementation phase.
Andreas Barckow, IASB Chair, said:
We thank our stakeholders for having provided us with valuable feedback in a very short timeframe. This has enabled us to move quickly in a balanced way. We are confident that the final amendments will respond to our stakeholders' urgent needs that have arisen from the implementation of the OECD’s Pillar Two model rules.
The final amendments to IAS 12 Income Taxes are expected to be issued by the end of May 2023.