IASB publishes a draft Interpretation of IAS 12 Income Taxes – Uncertainty over income tax treatments
18 November 2015
This edition outlines the proposed Interpretation of IAS 12 Income Taxes – Accounting for uncertainties in an income tax liability or asset set out in the recent Exposure Draft (ED) DI/2015/1 issued by the International Accounting Standards Board (IASB).
Uncertainties in income tax arise when a requirement of the tax law is unclear as to how it applies to a particular transaction and the final outcome is subject to the interpretation of the tax authorities which is not known by the entity at the end of the reporting period.
The draft Interpretation proposes that uncertainties in income tax liabilities or assets would be reflected in the tax liability or asset only when it is probable that the entity will pay or recover the amount under consideration.
The draft Interpretation does not include any new disclosure requirements, but emphasises that an entity will need to determine whether it needs to disclose information about the judgements and uncertainties inherent in the tax accounting, in accordance with IAS 1 Presentation of Financial Statements.
The draft Interpretation includes some illustrative examples to clarify the application of the requirements.
Comment on the draft Interpretation are due by 19 January 2016.