Amendments to IAS 12 - May 2021
In May 2021, the IASB issued amendments to IAS 12 Income Taxes in order to address potential issues of inconsistency and interpretation by users in respect of the initial recognition exemption (“IRE”) detailed in paragraphs 15 and 24 (for deferred tax liabilities and assets respectively).
- The amendments introduce an exception to the initial recognition exemption in IAS 12.
- Applying this exception, an entity does not apply the initial recognition exemption for transactions that give rise to equal taxable and deductible temporary differences.
- The amendments apply to transactions that occur on or after the beginning of the earliest comparative period presented.
- The amendments also apply to taxable and deductible temporary differences associated with right-of-use assets and lease liabilities, and decommissioning obligations and correspondingamounts recognised as assets at the beginning of the earliest comparative period presented.
- The amendments are effective for annual reporting period s beginning on or after 1 January 2023. Early application of the amendments is permitted.