In an unprecedented move, the International Accounting Standards Board (IASB) on 1 June proposed amendments to the IFRS for SMEs Accounting Standards in light of International tax reform. The Organisation for Economic Co-operation and Development (OECD) published the Pillar Two model rules in December 2021. These rules aim to ensure that large multinational companies would be subject to a minimum 15% tax rate.
The proposed amendments focus on three main areas:
1. Introducing a temporary exception to accounting for deferred taxes arising from the implementation of the Pillar Two model rules;
2. Introducing targeted disclosure requirements in periods when Pillar Two legislation is in effect;
3. Clarifying that ‘other events’ in the disclosure objective for income tax include enacted or substantively enacted Pillar Two legislation.
According to IASB Chair Andreas Barckow, ‘The proposed amendments would provide timely relief for affected SMEs while ensuring their users get the best information they can out of the financial statements.’ This suggests the IASB is committed to its role in ensuring the smooth transition of SMEs to the new global tax standards.
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