The European Financial Reporting Advisory Group (EFRAG) on July 14 issued a draft letter to the European Commission recommending endorsing the amendments to international accounting standard (IAS) 12 regarding deferred tax related to assets and liabilities arising from a single transaction.
The International Accounting Standard Board’s (IASB’s) amendments to IAS 12, issued May 7, are intended to clarify the “initial recognition exemption.” The changes specify that the exemption does not apply to transactions that, on initial recognition, give rise to equal and offsetting amounts of taxable and deductible temporary differences. The changes apply for annual periods beginning on or after 1 January 1, 2023, and may be applied earlier.
In its preliminary assessment, EFRAG concluded that the amendments satisfy the criteria for endorsement in the EU. Accordingly, it has recommended endorsement.
EFRAG is accepting comments on the draft endorsement, including the analyses supporting its conclusions, until September 29.
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