The draft IFRIC Interpretation applies to the determination of taxable profit or loss, tax bases, unused tax losses, unused tax credits and tax rates, in instances where there is uncertainty over the income tax treatments that affects the application of IAS 12 Income Taxes.
The draft IFRIC Interpretation considers four aspects of accounting for tax uncertainties, namely:
- whether an entity should consider uncertain tax treatments separately or collectively;
- the assumptions an entity should make about the examination of tax treatments by the taxation authorities;
- how an entity should determine taxable profit or loss, tax bases, unused tax losses, unused tax credits and tax rates; and
- how an entity should consider changes in facts and circumstances.
IAASA has engaged with a number of equity issuers on their accounting for uncertain tax positions in their annual financial statements and has secured undertakings from directors of certain issuers to provide enhanced disclosures in this regard. Additional disclosures have included the disclosure of accounting policies relating to uncertain tax positions, the inclusion of uncertain tax positions as an area of judgement and uncertainty and providing additional disclosures in the current tax note.
IAASA included the subject of uncertain tax positions in its Paper Observations on Selected Financial Reporting Issues – Years ending on or after 31 December 2014 (section 2.3 thereof refers) and has raised the matter at the regular meetings of EU national accounting enforcers (EECS) and with IASB / IFRS Interpretations Committee representatives.
Interested parties may comment in writing to the IFRS Foundation on the draft IFRIC Interpretation so as to be received no later than 19 January 2016.