EFRAG Final Comment Letter on IAS 12 and pillar two income taxes

  • EFRAG (European Financial Reporting Advisory Group) (dk green) Image

17 Mar, 2023

The European Financial Reporting Advisory Group (EFRAG) has published its Final Comment Letter in response to the International Accounting Standard Board's (IASB's) Exposure Draft 'International Tax Reform — Pillar Two Model Rules (Proposed amendments to IAS 12)'.

The exposure draft proposes to introduce a mandatory temporary exception to the requirements in IAS 12 Income Taxes to recognise and disclose information about deferred tax assets and liabilities arising from the OECD’s Pillar Two Model Rules, and also proposes the introduction of targeted disclosures.

In the final comment letter, EFRAG welcomes the IASB’s efforts to address the concerns of stakeholders about the implications for income tax accounting resulting from jurisdictions implementing the OECD rules.

EFRAG generally supports the IASB’s proposal to introduce a temporary exception to the requirements in IAS 12 and also supports the efforts of the IASB to define a disclosure approach that would provide information to the users to assess an entity’s exposure to paying top-up tax that would not involve undue cost or effort.

However, EFRAG proposes some improvements on the proposed targeted disclosures and encourages the IASB to add a disclosure objective that describes the needs of users of financial statements as it might help entities to apply judgment. 

A press release and the final comment letter are available on the EFRAG website. 

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