It may be unclear how tax law applies to a particular transaction or circumstance, or whether a taxation authority will accept a company’s tax treatment. IAS 12 Income Taxes specifies how to account for current and deferred tax, but not how to reflect the effects of uncertainty. IFRIC 23 provides requirements that add to the requirements in IAS 12 by specifying how to reflect the effects of uncertainty in accounting for income taxes.
IFRIC Interpretations (Interpretations) form part of the authoritative IFRS requirements. They are developed by the IFRS Interpretations Committee to provide requirements on specific application issues and are ratified by the IASB.
IFRIC 23 is effective for annual accounting periods beginning on or after 1 January 2019. Earlier application is permitted. IFRIC 23 has not yet been endorsed by the EU.
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.
IAASA is engaging with a number of equity issuers on their accounting for uncertain tax positions in their 2016 annual financial statements.