United States

Uncertainty over income tax treatments


International Accounting Standard 12, Income Taxes, provides requirements on the recognition and measurement of current and deferred tax liabilities and assets, but does not provide specific guidance for how uncertainty about a tax treatment should be reflected in the accounting for income taxes. To provide such guidance, the IFRS Interpretations Committee recently issued IFRIC Interpretation 23, Uncertainty over Income Tax Treatments, which addresses:

  • Whether an entity should consider uncertain tax treatments separately
  • The assumptions an entity should make about the examination of tax treatments by taxation authorities
  • How an entity should determine taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates
  • How an entity should consider changes in facts and circumstances

The Interpretation is effective for annual reporting periods beginning on or after January 1, 2019. Earlier application is permitted.