Accounting Standards Board
The Institute of Chartered Accountants of India
16th January, 2023
Exposure Draft on International Tax Reform- Pillar Two Model Rules (proposed amendments to IAS 12)
Indian Accounting Standards (Ind AS) are based on the IFRS Standards issued by the International Accounting Standards Board (IASB) of IFRS Foundation. The IASB, before issuing the new/amendments to IFRS Standards, issues consultative documents [such as Discussion Paper (DP), Exposure Draft (ED) etc] seeking public comments from across the globe. The Accounting Standards Board (ASB) of ICAI with the aim to provide an opportunity to the various stakeholders in India to raise their concerns at the initial International Standard-setting stage itself, invites comments on the consultative documents issued by the IASB. It also helps the Indian stakeholders to be aware of the preparations required for implementation of Ind AS in line with adhering to global timelines. Recently, the IASB has issued the following Exposure Draft for public comments:
- Exposure Draft on International Tax Reform- Pillar Two Model Rules (proposed amendments to IAS 12)
In December 2021, the Organisation for Economic Co-operation and Development (OECD) published its Pillar Two model rules which introduce a global minimum tax for large multinational enterprises by applying a system of top-up taxes. In order to respond to the concerns around the uncertainty over the accounting for deferred taxes arising from the rules and urgent need for clarity in the light of the imminent enactment of tax law to implement the rules in some jurisdictions, IASB issued the said Exposure Draft . The proposals in this Exposure Draft would introduce a temporary exception to the accounting for deferred taxes arising from the implementation of the said rules and targeted disclosure requirements.
Invitation to comment
The Accounting Standards Board (ASB) of ICAI with the aim to provide an opportunity to the various stakeholders in India to raise their concerns at the initial International Standard-setting stage itself, invites comments from public. The downloadable version is available at: https://resource.cdn.icai.org/72669asb58579.pdf
How to comment
Comments on the abovementioned ED may be submitted through any of the following modes, so as to be received not later than February 16, 2023 :
| 1. Electronically: | Click on http://www.icai.org/comments/asb/ to submit comment online (Preferred method) |
| 2. Email: | Comments can be sent to: commentsasb@icai.in |
| 3. Postal | Secretary, Accounting Standards Board, The Institute of Chartered Accountants of India, ICAI Bhawan, Post Box No. 7100, Indraprastha Marg, New Delhi 110 002 |
Further clarifications on this ED may be sought by e-mail to asb@icai.in
Introduction
Why is the IASB publishing this Exposure Draft?
In December 2021, the Organisation for Economic Co-operation and Development (OECD) published its Pillar Two model rules. The rules are part of a two-pillar solution to address the tax challenges arising from the digitalisation of the economy and were agreed by more than 135 countries and jurisdictions representing more than 90% of global GDP.
The Pillar Two model rules:
(a) aim to ensure that large multinational groups pay a minimum amount of tax on income arising in each jurisdiction in which they operate; and
(b) would achieve that aim by applying a system of top-up taxes that results in the total amount of taxes payable on excess profit in each jurisdiction representing at least the minimum rate of 15%.
Stakeholders informed the International Accounting Standards Board (IASB) of concerns about the potential implications for income tax accounting resulting from jurisdictions implementing the Pillar Two model rules. In particular, stakeholders were concerned about the uncertainty over the accounting for deferred taxes arising from the rules and said there was an urgent need for clarity in the light of the imminent enactment of tax law to implement the rules in some jurisdictions.
Proposals in this Exposure Draft
The proposals in this Exposure Draft would introduce:
(a) a temporary exception to the accounting for deferred taxes arising from the implementation of the Pillar Two model rules; and
(b) targeted disclosure requirements.
The IASB expects the proposed amendments to provide timely relief for affected entities and avoid inconsistent interpretations of IAS 12 Income Taxes developing in practice. The proposed amendments would also require an entity to provide specific information to users of financial statements before and after the Pillar Two model rules are in effect.
Next steps
The IASB will consider the comments it receives on the Exposure Draft and will decide whether to proceed with the proposed amendments. The IASB plans to complete any resulting amendments in the second quarter of 2023.
Invitation to comment
The IASB invites comments on the proposals in this Exposure Draft, particularly on the questions set out below. Comments are most helpful if they:
(a) respond to the questions as stated;
(b) specify the paragraph(s) to which they relate;
(c) contain a clear rationale;
(d) identify any wording in the proposals that is difficult to translate; and
(e) include any alternative the IASB should consider, if applicable. The IASB is requesting comments only on matters addressed in this Exposure Draft.
Read Full at below link
http://asbcomment.icai.org/documents/d2a49c2fedf7e0fd9b4a67536ff709ec.pdf
