O'Reilly logo

IFRS Essentials by Norbert Lüdenbach, Dieter Christian

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

IAS 12 INCOME TAXES

1 INTRODUCTION

The objective of IAS 12 is to prescribe the accounting treatment for income taxes. Income taxes include all domestic and foreign taxes which are based on taxable profits and also include taxes, such as withholding taxes, which are payable by a subsidiary, joint venture or associate on distributions to the reporting entity (IAS 12.2).

This chapter consists of two main areas:

  • Accounting treatment of current tax, which is the amount of income taxes payable with respect to the taxable profit for the current period (see Section 2).
  • Accounting treatment of deferred tax, i.e. of future tax advantages and disadvantages (see Section 3).

2 CURRENT TAX

The entity calculates the amount of current tax payable on the basis of taxable profit for the period (taxable profit · tax rate = current tax payable). Current tax for current and prior periods is, to the extent unpaid, recognized as a liability. If the amount already paid relating to current and prior periods exceeds the amount due for those periods, the excess is recognized as an asset (IAS 12.12).

Current tax liabilities (current tax assets) are measured at the amount expected to be paid to (recovered from) the taxation authorities on the basis of the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period (IAS 12.46).

Current tax is normally recognized in profit or loss. However, to the extent that the tax arises from a transaction or event that is ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required