Income tax accounting under IFRS: A look ahead

April 2008
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US tax services: IFRS: Income tax accounting under IFRS: Exploring the IASB's proposal

At a glance

PwC overview of the implications of how proposed IASB changes to accounting for income taxes will affect companies

Income tax accounting under IFRS article series
The IASB has proposed significantly changing the current IFRS standard on accounting for income taxes. This series that explores how the proposed changes might impact companies. Each article focuses on a particular aspect of the IASB’s proposal.

Article series addressing the key provisions of the IASB’s exposure draft on income taxes

To help our clients understand the IASB's exposure draft on income taxes, PwC developed a series of articles entitled Income tax accounting under IFRS: A look ahead which:
  • Compares the proposed guidance within the IASB's exposure draft to the current guidance in IAS 12 and FAS 109
  • Provides examples to illustrate the proposed guidance
  • Raises questions that companies may want to consider when thinking about how the proposed guidance could impact them


This publication is a compilation of all of the articles in this series.


Income tax accounting under IFRS: A look ahead: This and that

What else did the IASB propose in its income tax accounting exposure draft?

This is the ninth and final article in a series that explores how the IASB's proposed changes to the income tax accounting standard might impact companies. This article discusses a variety of matters included in the IASB's recent exposure draft.

Given the focus by the IASB and the FASB on resolving differences in their income tax accounting standards, we believe it is important for US companies to understand the IASB's proposed changes, regardless of whether they report under IFRS or US GAAP. We also encourage companies to provide comments to the IASB on their exposure draft and to the FASB on their invitation to comment (once available).

Income tax accounting under IFRS: A look ahead: Financial statement disclosures

What must a company disclose in its financial statements related to income taxes?

This is the eighth article in a series that explores how the IASB's proposed changes to the income tax accounting standard might impact companies. This article discusses the changes to the disclosure requirements proposed by the IASB.

Given the focus by the IASB and the FASB on resolving differences in their income tax accounting standards, we believe it is important for US companies to understand the IASB's proposed changes, regardless of whether they report under IFRS or US GAAP. We also encourage companies to provide comments to the IASB on their exposure draft and to the FASB on their invitation to comment (once available).

Income tax accounting under IFRS: A look ahead: Investment in subsidiaries Are deferred taxes required for differences between a company's book basis in its investment in the stock of another entity and the tax basis (i.e., an outside basis difference)? this is the seventh article in a series that explores how the IASB's proposed changes to the income tax accounting standard might impact companies. This article discusses how the IASB addressed the question of when deferred taxes must be recorded on outside basis differences.

Given the focus by the IASB and the FASB on resolving differences in their income tax accounting standards, we believe it is important for US companies to understand the IASB's proposed changes, regardless of whether they report under IFRS or US GAAP. We also encourage companies to provide comments to the IASB on their exposure draft and to the FASB on their invitation to comment (once available).

Income tax accounting under IFRS: A look ahead: Allocating income taxes

Where should a company record its income tax expense? This is the sixth article in a series that explores how the IASB's proposed changes to the income tax accounting standard might impact companies. This article discusses the proposed guidance for allocating income tax expense to the various financial statement components. The IASB is proposing guidance on accounting for uncertain tax positions. How does it compare to current accounting?

Income tax accounting under IFRS: A look ahead: Uncertain tax positions

The IASB is proposing guidance on accounting for uncertain tax positions. How does it compare to current accounting?

This is the fifth article in a series that explores how the IASB's proposed changes to the income tax accounting standard might impact companies. This article compares the proposed guidance to current IAS 12 and US GAAP. Given the focus by the IASB and the FASB on resolving differences in their income tax accounting standards, we believe it is important for US companies to understand the IASB's proposed changes, regardless of whether they report under IFRS or US GAAP. We also encourage companies to provide comments to the IASB on their Exposure Draft and to the FASB on their Invitation to Comment (once available).

Income tax accounting under IFRS: A look ahead: Intercompany transactions

Accounting for the income tax consequences of intercompany transactions — IASB's proposal differs significantly from US GAAP. This is the fourth article in a series that explores how the IASB's proposed changes to the income tax accounting standard might impact companies. This article compares the accounting for the income tax consequences of intercompany transactions under the IASB's proposal to the accounting under US GAAP.

Given the focus by the IASB and the FASB on resolving differences in their income tax accounting standards, we believe it is important for US companies to understand the IASB's proposed changes, regardless of whether they report under IFRS or US GAAP. We also encourage companies to provide comments to the IASB on their exposure draft and to the FASB on their invitation to comment (once available).

Income tax accounting under IFRS: A look ahead: Initial recognition

The IASB has introduced a new concept in accounting for deferred taxes that arise when an asset or liability is first recognized — in addition to recognizing deferred taxes, a related discount or premium may also be required.

Income tax accounting under IFRS: A look ahead: Tax basis The tax basis of an asset or liability is one of the key elements in determining deferred tax assets (DTAs) and deferred tax liabilities (DTLs). A company determines DTAs and DTLs by comparing the book carrying amount of an asset or liability to the tax basis of that asset or liability, and then applying the applicable tax rate to the resulting difference.

Determining the tax basis of an asset or liability may appear straightforward, but it can be one of the more difficult aspects of calculating deferred taxes. The IASB’s proposal attempts to clarify and simplify the determination of tax basis.

Income tax accounting under IFRS: A look ahead

How might the IASB's proposal to change the accounting for income taxes affect you? the IASB has proposed significantly changing the current IFRS standard on accounting for income tax (IAS 12). The FASB plans to issue an "invitation to comment" on the IASB's proposal to solicit input from US constituents as it considers its own convergence efforts. Upon completing its review, the FASB will decide whether and how to proceed with eliminating remaining differences between FAS 109, the US GAAP standard on income tax, and IAS 12.

Given the focus by both boards on resolving differences in their income tax accounting standards, we believe it is important for US companies to understand the IASB's proposed changes, regardless of whether they report under IFRS or US GAAP. We also encourage companies to provide comments to the IASB on their exposure draft and to the FASB on their invitation to comment (once available).