IAS 12 Income Taxes

Synopsis

• Current tax for the current and prior periods is recognised as a liability to the extent that it remains outstanding, or an asset, to the extent that amounts paid are in excess of that due. It should be recognised using the tax rates that have been enacted or substantively enacted by the reporting date.
• Deferred tax liabilities are recognised for taxable temporary differences
• Deferred tax assets are recognised for deductible temporary differences and unused tax losses and credits to the extent that a taxable profit will be available against which they can be utilised.
• Deferred tax assets and liabilities should be measured at the tax rates expected to apply to the date when the liability is settled or asset realised.

• Read the unaccompanied version of IAS 12

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Which version of the standard?

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Recent amendments

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The following interpretations refer to IAS 12

• IFRIC 7 Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies
  Provides guidance on the restatement of financial statements when hyperinflation is initially identified.

• IFRIC 21 Levies
  Provides guidance on when to recognise a liability for a levy imposed by a government.

• IFRIC 23 Uncertainty over Income Tax Treatments
  Clarifies how to apply the recognition and measurement requirements of IAS 12 when there is uncertainty over income tax treatments.

• SIC 25 Income Taxes – Changes in the Tax Status of an Enterprise or its Shareholders
  Addresses the deferred tax consequences of changes in tax status of an enterprise or its shareholders.

Other resources

Factsheets

• 2019 IFRS accounts
  Provides more information about Annual Improvements 2015-17
• 2022 IFRS Accounts
  Provides more information about Deferred Tax related to Assets and Liabilities arising from a Single Transaction

Financial Reporting Council

• Thematic review: Deferred taxes
  FRC review published in September 2022. It discusses recognition of deferred tax assets, disclosure of recognised and unrecognised deferred tax assets, judgements and estimates, presentation and other disclosures, and key expectations. An appendix gives examples of positive and negative evidence relevant to assessing the probability of future taxable profits.

This page was last updated 30 August 2022.