International Tax Reform: Pillar Two Model Rules – Amendments to IAS 12
Project Type:
Endorsement
Status:
Completed
Milestone:
Project Closure
Completed Date: 22 September 2023
Effective Date: 1 January 2023
The Amendments to IAS 12 International Tax Reform: Pillar Two Model Rules were approved for adoption by all members of the UK Endorsement Board on 19 July 2023.
A link to the Adoption Statement of the Amendments and the text of the Amendments can be found on the 2023 list of UK Adoptions.
The Amendments are not likely to lead to a significant change in accounting practice and do not meet the criteria for a post-implementation review under Regulation 11 in SI 2019/685.
Background
Development of the IASB’s Proposals
The IASB’s proposals were set out in Exposure Draft ED/2023/1 International Tax Reform: Pillar Two Model Rules - Amendments to IAS 12 (the ED). The UKEB submitted its final comment letter on 9 March 2023.
Description of the Amendments
Scope
The Amendments define the scope of the exception as applying to income taxes arising from tax law enacted or substantively enacted to implement the Pillar Two model rules.
Periods when the Tax is in Effect
Once the tax is in effect, an entity must disclose its current tax in relation to Pillar Two top-up taxes separately.
Periods when the Tax is Enacted or Substantively Enacted, but not yet in Effect
For periods in which Pillar Two legislation is enacted or substantively enacted but not yet in effect, entities would be required to disclose “information that helps users of financial statements understand the entity’s exposure to Pillar Two income taxes”.
In meeting that disclosure objective, an entity should disclose known or reasonably estimable quantitative and qualitative information about its exposure at the end of the reporting period. That information, however, need not reflect all the specific requirements of the legislation and could be presented as an indicative range.
Entities which do not have such information about their exposure to Pillar Two taxes must disclose that fact, together with information on progress made in assessing the entity’s exposure.
Transition
Entities are required to apply the mandatory temporary exception immediately and retrospectively and disclose that it has been applied. The targeted disclosure requirements for periods in which Pillar Two legislation is enacted or substantively enacted but not yet in effect are effective for annual periods beginning 1 January 2023. They are not required for interim periods ending in 2023.
Endorsement Criteria Assessment
On 26 June 2023 the UKEB published its draft Endorsement Criteria Assessment (ECA) of the Amendments.
The public consultation period closed on 10 July 2023. Thank you to all stakeholders that provided feedback.
All responses received were considered when finalising the ECA. The UKEB Final ECA was published on 19 July 2023. An accompanying Feedback Statement, describing how feedback received from stakeholders was addressed, was also published on the same date.
The following relevant documents are available at the foot of this page:
- Draft ECA and Invitation to Comment
- Responses from stakeholders
- Final ECA
- Feedback Statement
UKEB Meetings
UKEB Meetings
The Amendments were discussed in the following Board meetings:
- 19 January 2023: IASB general update
- 23 February 2023: Project Initiation Plan and Draft Comment Letter
- 7 March 2023: Final Comment Letter
- 27 April 2023: IASB General Update
- 22 June 2023: Draft Endorsement Criteria Assessment
- 13 July 2023: Endorsement Criteria Assessment and Adoption Package
Timeline
-
4
Project Closure
Hide all milestone documentation
The UKEB published its Due Process Compliance Statement on 22 September 2023.
Due Process Compliance Statement - Pillar Two Model Rules (Proposed amendments to IAS 12)
-
3
Final Documents
Hide all milestone documentation
The UKEB published its Endorsement Criteria Assessment and Feedback Statement on 19 July 2023.
ECA - International Tax Reform - Pillar Two Model Rules (Proposed amendments to IAS 12)
-
2
Consultation
Hide all milestone documentation
The UKEB published its Draft Endorsement Criteria Assessment on 26 June 2023 for public consultation.
DECA - International Tax Reform - Pillar Two Model Rules (Proposed amendments to IAS 12)
Invitation to Comment
The consultation closed on 10 July 2023.
Stakeholder Responses
The UKEB received the responses below from stakeholders on its Draft Endorsement Criteria Assessment.
-
1
Initiation
Hide all milestone documentation
The UKEB published its Project Initiation Plan on 1 March 2023.