ESMA statement on IAS 12 and US Tax Cuts and Jobs Act
01 February 2018
The Europeans Securities and Markets Authority (ESMA) has issued a public statement drawing issuers attention to the requirements of IAS 12 Income Taxes in light of the United States Tax Cuts and Jobs Act, which takes effect on 1 January 2018 and which was signed by the US President on 22 December 2017.
- Reminds issuers that Under IFRS there is no relief from the requirements to apply IAS 12 Income Taxes to tax legislation that has been substantively enacted at the balance sheet date, even in circumstances where the new tax legislation is complex;
- Acknowledges that a complete understanding of the implications of the Act may take some time. However, it expects EU issuers to be able to make a reasonable estimate of the impact of the material aspects of the Act on their current and deferred taxes in their 2017 annual financial statements.
- Appreciates that these reported amounts may be subject to a higher degree of estimation uncertainty than usually the case and that measurement adjustments may need to be made in subsequent reporting periods; and
- Notes that, along with local European regulators, it will monitor the level of transparency that issuers provide in their financial statements about the accounting for the effects of the Act and changes in estimates resulting from its implementation.
Further information is available from the ESMA web site here.