IFRS for SMEs — OECD pillar two model rules
Background
In March 2022, the OECD released technical guidance on its 15% global minimum tax agreed as the second ‘pillar’ of a project to address the tax challenges arising from digitalisation of the economy. This guidance elaborates on the application and operation of the Global Anti-Base Erosion (GloBE) Rules agreed and released in December 2021 which lay out a co-ordinated system to ensure that multinational enterprises with revenues above €750 million pay tax of at least 15% on the income arising in each of the jurisdictions in which they operate.
The IASB took up a maintenance project and released final amendments to IAS 12 to respond to stakeholders’ concerns about the potential implications of the imminent implementation of these rules on the accounting for income taxes.
Subsequently, the IASB came to the conclusion that the pillar two model rules (and the amendments to IAS 12) are also relevant to entities applying the IFRS for SMEs and added to its work plan a narrow-scope standard-setting project to amend Section 29 Income Tax of the IFRS for SMEs.
Current status of the project
This project has been completed. The IASB issued International Tax Reform — Pillar Two Model Rules (Amendments to the 'IFRS for SMEs' Standard) on 29 September 2023.
Project milestones
Date | Development | Comments |
---|---|---|
April 2023 | Issue first discussed by the IASB | |
1 June 2023 | Exposure draft International Tax Reform — Pillar Two Model Rules (Proposed amendments to the 'IFRS for SMEs' Standard) published | Comments requested by 17 July 2023 |
29 September 2023 | International Tax Reform — Pillar Two Model Rules (Amendments to the 'IFRS for SMEs' Standard) issued | An entity applies the exception and the requirement to disclose that it has applied the exception immediately upon issuance of the amendments; the remaining disclosure requirements are required for annual reporting periods beginning on or after 1 January 2023. |