IAS 12: Income Taxes is part of the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS). IAS 12 sets the accounting treatment of all taxable profits and losses, both national and foreign.
Timeline of IAS 12:
| Date | Development |
|---|---|
| April 1978 | Exposure Draft E13 Accounting for Taxes on Income published |
| July 1979 | IAS 12 Accounting for Taxes on Income issued |
| January 1989 | Exposure Draft E33 Accounting for Taxes on Income published |
| January 1994 | IAS 12 (1979) was reformatted |
| October 1994 | Exposure Draft E49 Income Taxes published |
| October 1996 | IAS 12 Income Taxes issued |
| October 2000 | Limited Revisions to IAS 12 published (tax consequences of dividends) |
| March 2009 | Exposure Draft ED/2009/2 Income Tax published |
| September 2010 | Exposure Draft ED/2010/11 Deferred Tax: Recovery of Underlying Assets (Proposed amendments to IAS 12) published |
| December 2010 | Amended by Deferred Tax: Recovery of Underlying Assets |
| January 2016 | Amended by Recognition of Deferred Tax Assets for Unrealised Losses |
The standard is organised as follows (paragraph numbers refer to the current version of IAS 12, including later amendments):
| Part | Content | Paragraphs |
|---|---|---|
| General | Objective | – |
| Scope, including the exception for Pillar Two income taxes | 1–4A | |
| Definitions, including tax base | 5–11 | |
| Recognition of current tax liabilities and current tax assets | 12–14 | |
| Recognition of deferred tax liabilities and deferred tax assets | Taxable temporary differences, including goodwill and the initial recognition exception | 15–23 |
| Deductible temporary differences | 24–33 | |
| Unused tax losses and unused tax credits | 34–36 | |
| Reassessment of unrecognised deferred tax assets | 37 | |
| Investments in subsidiaries, branches and associates and interests in joint arrangements | 38–45 | |
| Measurement | 46–56 | |
| Recognition of current and deferred tax | Items recognised in profit or loss and outside profit or loss | 57–65A |
| Deferred tax arising from a business combination | 66–68 | |
| Current and deferred tax arising from share-based payment transactions | 68A–68C | |
| Presentation (tax assets and tax liabilities, offsetting, tax expense) | 71–78 | |
| Disclosure, including disclosures relating to Pillar Two income taxes | 79–88D | |
| Effective date | 89 ff. | |
| Withdrawal of SIC-21 | 99 | |
The taxable amount a company is liable for is composed of its tax base multiplied with the relevant tax rate in its country of settlement. The tax base for a company will in general be the final amount reported in the statement of profit or loss plus or minus any comprehensive income or loss. There are however situations where the accounting profit may differ from the taxable profit. This difference that arises most likely needs to be settled in a future period. Therefore the difference needs to be recognised on the balance sheet as a tax asset or liability. A tax asset is only recognisable to the extent that is likely to be recovered in the future, where a tax liability always needs to be recognised in full.