IFRIC 21 Levies

Synopsis

IFRIC 21 provides guidance on when to recognise a liability for a levy imposed by a government, other than those levies within the scope of other standards eg Income taxes and fines or penalties imposed for breaches of legislation.

A liability to pay levies is recognised when an obligating event takes place, such as the generation of revenue in the current period. There is no obligating event where a levy is triggered in a future period and an entity is economically compelled to continue to operate in the future period or the financial statements are prepared on a going concern basis suggesting that the entity will continue to operate in the future period.

If the obligating event occurs over a period of time, the liability is recognised progressively; if the obligating event is reaching a minimum threshold, the liability is recognised when the minimum threshold is met.

Illustrative examples accompany IFRIC 21 and these detail how to account for various types of levies.

• Read the unaccompanied version of IFRIC 21

The International Accounting Standards Board (IASB) provides free access to the consolidated unaccompanied international accounting standards for the current year through its website. Free registration is required.

Which version of the interpretation?

Financial Reporting Faculty members who joined the faculty prior to 1 November 2022 have premium access to the consolidated edition of IFRS and amendments through the IASB's IFRS Standards Navigator service. Please log into IFRS Standards Navigator to access electronic versions of the standards through these links.

Please be aware that as part of the changes to ICAEW faculty membership, this service will be withdrawn after 31 December 2022.

IFRSs referred to by IFRIC 21

• IAS 1 Presentation of Financial Statements 
• IAS 8 Accounting Policies, Changes in Estimates and Errors
• IAS 12 Income Taxes 
• IAS 20 Accounting for Government Grants and Disclosures of Government Assistance 
• IAS 24 Related Party Disclosures 
• IAS 34 Interim Financial Reporting 
• IAS 37 Provisions, Contingent Liabilities and Contingent Assets

IFRIC referred to by IFRIC 21

• IFRIC 6 Liabilities arising from Participating in a Specific Market-Waste Electrical and Electronic Equipment

Current proposals

1. The Board is developing proposals for targeted improvements to IAS 37 in order to align the standard with the Conceptual Framework and make clarification amendments. The amendments are likely to include replacing IFRIC 21 with new application requirements for levies.

This page was last updated 4 February 2022.