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IFRIC 23 Uncertainty over Income Tax Treatments


The IFRS Interpretations Committee was asked to clarify when the recognition of a current tax asset is appropriate if tax laws require an entity to make an immediate payment in respect of a disputed amount. In the situation in the question, a tax examination results in an additional charge but the entity intends to appeal against the additional charge.

IASB Draft Interpretation

On 21 October 2015, a Draft Interpretation was published, with a comment period until 19 January 2016.


The Draft Interpretation is applied to the determination of taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates, in circumstances in which there is uncertainty over income tax treatments that affects the application of IAS 12. It is not limited to a specific situation.

The proposed consensus

An entity shall determine whether each uncertain tax treatment should be considered separately or together as a group, based on which approach provides better predictions of the resolution of the uncertainty.

Uncertain tax treatments are assessed under the assumption that a taxation authority will examine those amounts and have full knowledge of all relevant information when making those examinations.

An entity shall determine the taxable profit (tax loss), tax bases, unused tax losses, unused tax credits or tax rates:

  • consistently with the tax treatment in its income tax filings if it is probable that the taxation authority will accept an uncertain tax treatment; or
  • by using the most likely amount or the expected value if it is not probable that the taxation authority will accept an uncertain tax treatment, based on which method will provide the better prediction of the resolution of the uncertainty.

If facts and circumstances change, an entity shall reassess the judgements and estimates required by the Draft Interpretation.

The Draft Interpretation does not introduce any new disclosure requirements, but refers to existing disclosure requirements in IAS 1 Presentation of Financial Statements, IAS 12 and IAS 37 Provisions, Contingent Liabilities and Contingent Assets.


The Draft Interpretation proposes limited retrospective application consisting in recognising the cumulative effect of initial application of the requirements in retained earnings, or in other appropriate components of equity. Full retrospective application is permitted, if an entity can do that without using hindsight.

EFRAG's Comment Letter

On 17 November 2015, EFRAG published its draft comment letter on the Draft Interpretation.

On 12 February 2016, EFRAG published its final comment letter, in which it supported the proposed requirements as they would remove the existing inconsistencies in accounting for uncertain income tax treatments. EFRAG also observed that the proposed requirements might, in certain circumstances, lead to accounting for uncertainties arising on other taxes or positions which may be viewed as economically similar, on different bases. Without influencing the IFRS Interpretations Committee’s work on finalising the Interpretation, EFRAG suggests that the IASB consider whether and how to address these differences.

IFRIC Interpretation 23 Uncertainty over Income Tax Treatments

On 7 June 2017, the IASB issued IFRIC 23 Uncertainty over Income Tax Treatments .

EFRAG's Endorsement Advice

On 2 August 2017, EFRAG issued a draft endorsement advice letter and a separate invitation to comment relating to the endorsement for use in the EU of IFRIC 23.

On 6 November 2017, EFRAG published its final endorsement advice which stated that IFRIC 23 satisfied the criteria for endorsement for use in the EU and recommended its endorsement.

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