BDO submits comment letter: Presentation of Taxes that are not in the Scope of IAS 12 Income Taxes
BDO submits comment letter: Presentation of Taxes that are not in the Scope of IAS 12 Income Taxes
BDO submitted its comment letter on the IFRS Interpretation Committee’s (the Committee) Tentative Agenda Decision: Presentation of Taxes or Other Charges that are Not Income Taxes within the Scope of IAS 12 Income Taxes (IFRS 18 Presentation and Disclosure in Financial Statements).
The issue raised to the Committee is whether an entity applying IFRS 18 may present taxes or other charges that are not income taxes within the scope of IAS 12 in either the ‘income tax expense or income’ line item or elsewhere within the income taxes category of the statement of profit or loss. The Committee noted that IFRS 18 requires the income taxes category to include only tax expense or tax income included in the statement of profit or loss applying IAS 12, along with related foreign exchange differences. Therefore, entities cannot present taxes or other charges outside the scope of IAS 12 in this category or within the required ‘income tax expense or income’ line item. Entities may, however, present additional line items and subtotals in a primary financial statement if needed for a useful structured summary. The Committee concluded that existing requirements in IFRS Accounting Standards provide an adequate basis and therefore decided not to add a standard‑setting project to the work plan.
BDO broadly agrees with the technical analysis set out in the TAD. BDO, however, notes that the TAD is more restrictive than IFRS 18 in determining the income and expenses that may be classified in the income tax category. Therefore, BDO recommends that the TAD be suitably amended to align with the scope of income taxes category (taxes accounted applying IAS 12) as required by IFRS 18 instead of referring to taxes within the scope of IAS 12.
The comment letter may be accessed here.
The issue raised to the Committee is whether an entity applying IFRS 18 may present taxes or other charges that are not income taxes within the scope of IAS 12 in either the ‘income tax expense or income’ line item or elsewhere within the income taxes category of the statement of profit or loss. The Committee noted that IFRS 18 requires the income taxes category to include only tax expense or tax income included in the statement of profit or loss applying IAS 12, along with related foreign exchange differences. Therefore, entities cannot present taxes or other charges outside the scope of IAS 12 in this category or within the required ‘income tax expense or income’ line item. Entities may, however, present additional line items and subtotals in a primary financial statement if needed for a useful structured summary. The Committee concluded that existing requirements in IFRS Accounting Standards provide an adequate basis and therefore decided not to add a standard‑setting project to the work plan.
BDO broadly agrees with the technical analysis set out in the TAD. BDO, however, notes that the TAD is more restrictive than IFRS 18 in determining the income and expenses that may be classified in the income tax category. Therefore, BDO recommends that the TAD be suitably amended to align with the scope of income taxes category (taxes accounted applying IAS 12) as required by IFRS 18 instead of referring to taxes within the scope of IAS 12.
The comment letter may be accessed here.