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We are supportive of the temporary exception for the accounting of deferred taxes arising from the implementation of Pillar Two model rules. This will provide entities with timely relief from accounting for deferred taxes in relation to a complex new tax law to allow stakeholders time in assessing the implications. At the same time, this will avoid inconsistent interpretations of IAS 12 Income Taxes in practice.
Cognisant that this exception may lead to potential loss of information to users of the financial statements, the ED has proposed additional disclosures which indicate entities’ potential exposures to paying top-up taxes and the jurisdictions in which those potential exposures might exist. However, we have concerns over the introduction of such disclosures.
Furthermore, with the intensification of international efforts in creating a more equitable and transparent corporate tax base, international tax rules for multinationals are changing at a rapid pace. This will be a good opportunity for IASB to perform a holistic review of IAS 12, specifically on its scope.
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