IFRS Tax Implications

From IFRSTaxImplications.com:

The tax implications of IFRS are becoming increasingly important due to the SEC Roadmap that has set the stage for the use of financial statements in accordance with International Financial Reporting Standards. Although this would be a large change for the United States, according to the Journal of Accountancy approximately 100 countries already require IFRS or are in the process of converging their national accounting standards to the new global standards. The big 4 accounting firms are focusing in on the tax issues involved in this global movement. Currently Deloitte has forecasted convergence in several areas:

• Balance sheet classification of deferred liabilities as current or noncurrent
• Enacted (U.S. tax jurisdictions) tax rates
• Exception for initial recognition of deferred tax with regard to certain acquisitions
• Provision for current and deferred taxes arising from intercompany transactions
• Provision for deferred taxes on temporary differences that arise due to changes in exchange rates in foreign subsidiaries that use the reporting currency as their functional currency (as opposed to using the local currency as their functional currency)

The starting point for computing taxable income has been based on the accounting methods defined in U.S. GAAP. Since there will soon be a change in the accounting method for financial reporting the questions highlighted by Delloite inlcude:

• Is the new financial reporting standard a permissible tax accounting method?
• Is the new book method preferable for tax reporting purposes?
• Is it necessary to file changes in methods of accounting?
• Will there be modifications in the computation of permanent and temporary differences?
• How will reporting in accordance with IFRS impact the computation of taxable earnings and profits, foreign source income, and investments in subsidiaries?

For more, go to IFRSTaxImplications.com...