On Tuesday 11 April, the International Accounting Standards Board (IASB) decided to finalise amendments to the IAS 12 accounting standard, in accordance with the Pillar Two model rules published by the Organisation for Economic Co-operation and Development (OECD).
This standard prescribes the accounting treatment for current and deferred income taxes to reflect the full tax effects of transactions recognised in the period.
These amendments, approved in a special supplementary meeting, will allow companies to avoid recognising deferred taxes resulting from implementing the Pillar Two model rules.
“We are confident that the final amendments will respond to our stakeholders’ urgent needs that have arisen from the implementation of the OECD’s Pillar Two model rules”, said Andreas Barckow, IASB Chairman, in a statement.
The final amendments to IAS 12 are expected to be published by the end of May 2023.
They will introduce targeted disclosure requirements for affected companies to help users of financial statements better understand a company’s exposure to Pillar Two income taxes arising from this legislation, particularly before its effective date.
According to the IASB, the amendments will enable the companies concerned to apply IAS 12 consistently and investors to be better informed before and after any Pillar Two legislation comes into force.
It is worth noting that the OECD agreement, composed of two pillars, aims to fight against tax base erosion (see EUROPE 13122/19). Pillar I consists of a tax on the digital sector, while Pillar II provides a minimum 15% tax on multinationals. The EU Council approved the directive implementing Pillar II (see EUROPE 13085/8) in December 2022. Pillar I is still under discussion at the international level. (Original version in French by Anne Damiani)