ESMA issues statement on income tax consequences of the US tax reform under IFRS

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29 Jan 2018

The European Securities and Markets Authority (ESMA) has issued a public statement, “Accounting for Income Tax Consequences of the United States Tax Cuts and Jobs Act under IFRS,” which clarifies certain accounting requirements in IAS 12, “Income Taxes” and the impact the tax reform may have on year-end financial reporting.

On 22 December 2017, the United States Tax Cuts and Jobs Act of 2017 was signed into law. ESMA issued this public statement to ease the concerns of some issuers and auditors regarding “their ability to complete fully the accounting under IAS 12 Income Taxes for the effects of the Act in their 2017 annual financial statements due to the short time available to assess the accounting consequences of the Act and the lack of information on their tax position.” In addition, the public statement notes that IAS 12 does not provide for any easing requirements with regard to changes in tax law enacted shortly before the year-end.

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