The Institute of Chartered Accountants of India (ICAI) has issued amendments to AS 22, Accounting for Taxes on Income, effective from April 1, 2024, for non-company entities. These amendments introduce a temporary exception to the requirements for recognizing and disclosing deferred tax assets and liabilities related to Pillar Two income taxes, in light of the international tax reform and Pillar Two Model Rules endorsed by the OECD/G20. This ensures large multinational enterprises (MNEs) pay a minimum level of tax on income in each jurisdiction. The amendments also include targeted disclosure requirements for entities affected by these rules.
Accounting Standards Board
The Institute of Chartered Accountants of India
29th July, 2024
Amendments to AS 22, Accounting for Taxes on Income issued by the ICAI
(For non-company entities)
International Tax Reform-Pillar Two Model Rules
The Pillar Two Model Rules, released on 20 December 2021, are part of the Two-Pillar Solution to address the tax challenges of the digitalisation of the economy that was agreed by 137 member jurisdictions of the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting’s Statement (BEPS) and endorsed by the G20 Finance Ministers and Leaders in October 2021. The Pillar Two Model Rules are designed to ensure large multinational enterprises (MNEs) pay a minimum level of tax on the income arising in each jurisdiction where they operate
Considering that entities may need time to determine how to apply the principles and requirements in AS 22, Accounting for Taxes on Income (issued by the ICAI) to account for deferred taxes related to top-up tax, the Council of the ICAI decided to introduce a temporary exception to the requirements in AS 22 (issued by the ICAI) to recognise and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes because once the Pillar Two Model Rules are enacted in India, these amendments would be relevant to the non-company entities applying Accounting Standards issued by the ICAI and to whom Pillar Two Model Rules will be applicable.
The amendments introduce:
(a) a temporary exception to the requirements to recognise and disclose information about deferred tax assets and liabilities related to Pillar Two income taxes; and
(b) targeted disclosure requirements for affected entities.
Amendments to AS 22, Accounting for Taxes on Income issued by the ICAI for non-company entities are effective for annual reporting periods beginning on or after April 1, 2024. The same can be accessed at the following link:
