The momentum around BEPS Pillar Two minimum tax continues to gather pace with EU approval and releases from the OECD (particularly on safe harbours) both in December 2022. Pillar Two is timetabled to apply in the UK to accounting periods beginning on or after 1 January 2024. The IASB (International Accounting Standards Board) has continued to advance proposals to amend IAS 12 in relation to IFRS tax accounting for Pillar Two following concerns raised by stakeholders. An IASB Staff Paper was issued in November 2022 and now the IASB has issued an Exposure Draft of the proposed amendments to IAS 12 for comments until 10 March 2023. These amendments are expected to be adopted by the end of June 2023 and the deferred tax exemption applies from adoption.
A previous article entitled ‘IASB issues accounting paper on BEPS Pillar Two’ published in November 2022 provides information on the Staff Paper. Then, following the publication of the new Exposure Draft, the KPMG International Standards Group (ISG) published updated Commentary and a talkbook.
The proposed amendments to IAS 12 comprise two key elements: i) a temporary mandatory exception from accounting for deferred tax related to top-up tax applying from adoption; and ii) new disclosures, particularly before the top-up tax rules come into effect, which apply to annual reporting periods starting on or after 1 January 2023.