The outreach events gave practitioners and others an opportunity to voice their opinions on topics considered in the discussion paper on the financial reporting of income tax (published in December 2011). These opinions will be considered in future proactive work on this topic.
The discussion paper provided possible enhancements to the requirements for financial reporting of income tax currently in IAS 12 Income Taxes. Overall, respondents noted that (1) existing guidance should be improved and (2) all exceptions allowed under IAS 12 should be removed.
The paper provided alternative approaches that could result in a replacement standard of IAS 12. The temporary difference approach was the best received, with participants noting it's consistency with the underlying principles of IFRS.
Overall, participants expressed their support in maintaining IAS 12 in order to:
- provide enhanced definition of taxes in accounting in order to cover relevant issues entities are struggling with;
- remove perceived inconsistencies in the recognition, measurement, presentation and disclosure of entities’ taxes (i.e. the exemptions included in the standard);
- introduce improved guidance — such as discounting — after having carefully considered the cost of applying it and the benefits derived.
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Please click for access to the press release and the report, both available on the EFRAG website.