IASB proposes narrow-scope amendments to IAS 12

In December 2021, the Organisation for Economic Co-operation and Development (OECD) published its Pillar Two model rules, that aim to address the tax challenges arising from the digitalisation of the economy. The Pillar Two model rules provide a template for the implementation of a minimum corporate tax rate of 15% that large multinational companies would pay on income generated in each jurisdiction in which they operate.

In response to stakeholders’ concerns about the potential implications of the imminent implementation of these rules on the accounting for income taxes, the IASB has proposed accelerated narrow-scope amendments to IAS 12 Income Taxes.

The IASB has tentatively decided to introduce:

• a temporary exception from accounting for deferred taxes arising from the implementation of the rules; and
• targeted disclosures requirements for affected companies.

An exposure draft is expected to be published in January 2023 with a comment period of 60 days.

The amendments are expected to be finalised in the second quarter of 2023 and would be effective immediately.

The press release by the IASB may be accessed here.