Despite concerns among EU securities issuers about the short time available to assess the accounting consequences of the US Tax Cuts and Jobs Act, the European Securities and Markets Authority (ESMA) has confirmed that 2017 annual financial statements for reporting periods that include 22 Decembe
Despite concerns among EU securities issuers about the short time available to assess the accounting consequences of the US Tax Cuts and Jobs Act, the European Securities and Markets Authority (ESMA) has confirmed that 2017 annual financial statements for reporting periods that include 22 December 2017 must include a reasonable estimate of the Act’s impact on current and deferred taxes under IAS 12 Income taxes.
In the interests of ensuring consistent application of IFRS in the EU, ESMA has issued a public statement, ‘Accounting for Income Tax consequences of the United States Tax Cuts and Jobs Act under IFRS’, which stresses that there is no relief under IFRS from the requirement to measure deferred tax assets and liabilities on the basis of laws enacted by the end of the reporting period, even where complex legislation is substantively enacted shortly before the year-end. In relation to the US Tax Cuts and Jobs Act, this will apply to reporting periods that include 22 December 2017, the date on which the US Act became law.
ESMA acknowledges that the amounts reported may be subject to a ‘higher degree of estimation uncertainty’ than usual and adjustments may be necessary in subsequent reporting periods as more accurate information emerges on the impact of the Act. The statement highlights the need for ‘transparent and informative disclosure’ under IAS 12 of the amount of deferred tax expense/income relating to changes in tax rates or new taxes, and explanation of changes in applicable tax rates compared to the previous accounting period.
ESMA says it will expect to see the contents of its public statement reflected in annual financial statements for 2017 and any subsequent reporting periods and, together with national competent authorities, will monitor the level of transparency in financial statements about accounting for the effects of the Act.
Despite concerns among EU securities issuers about the short time available to assess the accounting consequences of the US Tax Cuts and Jobs Act, the European Securities and Markets Authority (ESMA) has confirmed that 2017 annual financial statements for reporting periods that include 22 Decembe
Despite concerns among EU securities issuers about the short time available to assess the accounting consequences of the US Tax Cuts and Jobs Act, the European Securities and Markets Authority (ESMA) has confirmed that 2017 annual financial statements for reporting periods that include 22 December 2017 must include a reasonable estimate of the Act’s impact on current and deferred taxes under IAS 12 Income taxes.
In the interests of ensuring consistent application of IFRS in the EU, ESMA has issued a public statement, ‘Accounting for Income Tax consequences of the United States Tax Cuts and Jobs Act under IFRS’, which stresses that there is no relief under IFRS from the requirement to measure deferred tax assets and liabilities on the basis of laws enacted by the end of the reporting period, even where complex legislation is substantively enacted shortly before the year-end. In relation to the US Tax Cuts and Jobs Act, this will apply to reporting periods that include 22 December 2017, the date on which the US Act became law.
ESMA acknowledges that the amounts reported may be subject to a ‘higher degree of estimation uncertainty’ than usual and adjustments may be necessary in subsequent reporting periods as more accurate information emerges on the impact of the Act. The statement highlights the need for ‘transparent and informative disclosure’ under IAS 12 of the amount of deferred tax expense/income relating to changes in tax rates or new taxes, and explanation of changes in applicable tax rates compared to the previous accounting period.
ESMA says it will expect to see the contents of its public statement reflected in annual financial statements for 2017 and any subsequent reporting periods and, together with national competent authorities, will monitor the level of transparency in financial statements about accounting for the effects of the Act.
