IASB publishes Exposure Draft International Tax Reform—Pillar Two Model Rules on 9 January 2023

The IASB has published the Exposure Draft International Tax Reform—Pillar Two Model Rules, which proposes amendments to IAS 12 Income Taxes.

OECD’s Pillar Two model rules aim to ensure that large multinational groups (generally with revenue exceeding €750 million) pay a minimum amount of tax on income arising in each jurisdiction in which they operate. This would be achieved by applying a system of top-up taxes that results in the total amount of taxes payable on excess profit in each jurisdiction representing at least the minimum rate of 15%. Stakeholders raised concerns with the IASB about the potential implications of the income tax accounting, especially accounting for deferred taxes, arising from the Pillar Two model rules.

In response to stakeholder concerns, the IASB has proposed amendments to IAS 12 that aim to provide a temporary exception from accounting for deferred taxes arising from the implementation of the OECD’s Pillar Two model rules, as well as targeted disclosures for affected entities.

The Exposure Draft is open for comment until 10 March 2023.  

The Exposure Draft may be accessed here.