IAS 12 Amendments - Income Taxes: Short Term Convergence
- Isabel Batista
The project on Income Taxes started as a joint project with the FASB with the objective of reducing the differences between IAS 12 Income Taxes and the US standard, SFAS 109 Accounting for Income Taxes, and related US GAAP. The project also aims to provide clarification/guidance on certain aspects of tax accounting that IAS 12 does not address specifically. That means that the project does not involve a re-think of the accounting for income taxes and retains the basic approach to accounting for income taxes, known as the temporary difference approach.
An Exposure Draft to replace IAS 12 was published by the IASB on 31 March 2009. The FASB has suspended its deliberations on this project, and does not intend to issue an amendment to SFAS 109 on Income Taxes at this time.
EFRAG considered the proposals at several of its meetings and published its draft comment letter on the ED Income Taxes on 6 June 2009.
In September 2009 EFRAG issued its final comment letter on the ED Income Tax. EFRAG was not supportive to the proposals of the ED as EFRAG was not convinced that they represent an improvement to existing IAS 12.
Based on the comments received to the ED Income Tax, the IASB indicated that they would consider undertaking a fundamental review of accounting for income taxes at some time in the future. In the meantime, the IASB decided to undertake a limited scope project to amend IAS 12, which resulted in the publication of the ED Deferred Tax: Recovery of Underlying Assets in September 2010. The IASB would also deternine whether there were other areas of uncertainty in IAS 12 that would be addressed through limited scope amendments to the Standard.
This project therefore finished at the Final Comment Letter stage.