The United States Tax Cuts and Jobs Act (‘the US Tax Act’) was signed into law on 22 December 2017 and introduces significant changes in US tax laws taking effect on 1 January 2018. The US Tax Act reduces tax rates and modifies policies, credits, and deductions for individuals and businesses.
Some EU issuers and their auditors have expressed concerns regarding their ability to complete fully the accounting under IAS 12 Income Taxes for the effects of the US Tax Act in their 2017 annual financial statements due to the short time available to assess the financial reporting impact and the lack of information on their tax position.
To mitigate the risk of inconsistent application of IFRS in the EU, ESMA has published this Public Statement to provide clarifications on accounting for the income tax consequences of the US Tax Act under IFRS.
ESMA’s Public Statement may be accessed here