Income Taxes
The project objective is to clarify and improve IAS 12 Income Taxes and to reduce the differences between IAS 12 and the US standard, SFAS 109 Accounting for Income Taxes, and related US GAAP. It was added to the Board’s agenda in September 2002.
The IFRIC and IASB staff have received many questions on IAS 12, indicating that it is a standard that is sometimes difficult to apply. Income tax is also frequently identified as a source of significant reconciling items for US-listed foreign registrants applying IFRS and constituents have indicated that the prospects of convergence is welcome.
Where are we in the project?
The Exposure Draft of an IFRS to replace IAS 12 was published by the IASB on 31 March 2009; the comment period ended on 31 July 2009.
In the October joint meeting with the FASB, the both boards indicated that they would consider undertaking a fundamental review of accounting for income taxes at sometime in the future. In the meantime, the IASB is considering which issues it should address in a limited scope project to amend IAS 12.
Estimated project completion
The IASB is considering a revised plan for the income tax project.
Is this project part of the Memorandum of Understanding?
The FASB announced in September 2008 that it would review its strategy for short-term convergence projects in the light of the possibility that some or all US public companies might be permitted or required to adopt IFRSs at some future date. As part of that review, it will solicit input from US constituents by issuing an Invitation to Comment containing the IASB's proposed replacement of IAS 12.
At the conclusion of that review, the FASB will decide whether to undertake a project that would eliminate differences in the accounting for tax by adopting the IFRS.
This project forms part of the Memorandum of Understanding between the IASB and the FASB which sets out a Roadmap of Convergence between IFRSs and US GAAP 2006-2008.
Click here for more information on the MoU.