EFRAG’s Final Comment Letter on the IASB’s ED International Tax Reform – Pillar Two Model Rules

​The ED, which was issued on 9 January 2023, proposes to introduce a mandatory temporary exception to the requirements in IAS 12 Income Taxes to recognise and disclose information about deferred tax assets and liabilities arising from the OECD’s Pillar Two Model Rules. The ED also proposes the introduction of targeted disclosures. 

​In its letter, EFRAG welcomes the IASB’s efforts to address the concerns of stakeholders about the implications for income tax accounting resulting from jurisdictions implementing the Pillar Two model rules.  

EFRAG generally supports the IASB’s proposal to introduce the aforementioned temporary exception to the requirements in IAS 12.

Furthermore, EFRAG supports the efforts of the IASB to define a disclosure approach that would provide information to the users to assess an entity’s exposure to paying top-up tax that would not involve undue cost or effort. However, EFRAG proposes some improvements on the proposed targeted disclosures and encourages the IASB to add a disclosure objective that describes the needs of users of financial statements as it might help entities to apply judgment. 

Lastly, EFRAG reminds the IASB of the urgent need of the proposed exception. Hence, perfecting the disclosure requirements should not come at the price of delaying the finalisation of the amendments.  

More details can be found in EFRAG's Comment Letter here​​.