Deloitte comment letter on levies
Sep 05, 2012
Deloitte's IFRS Global Office has submitted a letter of comment to the International Accounting Standards Board (IASB) on Draft IFRIC Interpretation DI/2012/1 — 'Levies Charged by Public Authorities on Entities that Operate in a Specific Market'.
In the comment letter, we agree that the consensus in the draft Interpretation appropriately (1) analyses the treatment of levies within its scope under current IFRSs and (2) applies the IAS 37 definition of a liability to levies. However, we go on to raise concern that the draft Interpretation does not deal with levies that are (1) due only if a minimum revenue threshold is achieved, (2) calculated as a fixed amount or (3) based on a graduated rate calculation.
Expressing similar concerns to those raised by the UK Financial Reporting Council (FRC), the comment letter also notes:
[W]e would still encourage the Board to consider whether non-reciprocal transactions in general, and government levies in particular, are best dealt with by IAS 37 and whether an approach similar to the current tax requirements of IAS 12 could be developed to reflect better the nature of government levies.