OECD Pillar Two: publication of final amendments to IAS 12 expected by end of May

Keywords: Mazars, Thailand, IASB, OECD Pillar Two, IAS 12, Deferred taxes 

9 June 2023

In April, at a supplementary meeting dedicated to this topic, the IASB decided to finalise the amendments. In light of the comments received, the IASB decided that it would not specify the exact disclosures (or the basis on which the disclosures should be prepared) that an entity would be required to provide on its exposure to OECD Pillar Two income taxes during the period between the enactment (or substantive enactment) of the OECD Pillar Two rules and their implementation. 

The final amendments would thus: 

• introduce a temporary exception (with no specified end date) to the recognition of deferred taxes resulting from the implementation of the OECD Pillar Two rules under IAS 12 and the disclosure of information about these deferred taxes; 
• require an entity to disclose that it has applied this exception; 
• between the enactment (or substantive enactment) of the OECD Pillar Two rules and their implementation, require the disclosure of known or reasonably estimable information (similar to the requirements of IAS 8 ahead of the implementation of new standards) that would help users of financial statements to understand the entity’s exposure to income taxes arising from the OECD Pillar Two rules: 

• these disclosures should be both quantitative and qualitative; 
• these disclosures would not need to reflect all the specific requirements of the legislation, and could be provided in the form of an indicative range; 
• if information is not known or reasonably estimable, the entity would be required to provide a declaration to this effect and state the progress it has made towards assessing its exposure to income taxes arising from the OECD Pillar Two rules; 

• require separate presentation of current tax expense arising from the OECD Pillar Two rules. 

The publication of the amendments is scheduled for the second half of May 2023. The temporary exception to the recognition of deferred taxes would be applicable retrospectively, immediately on publication of the amendments.