IAS 12 Income Taxes
International Accounting Standard 12
Overview of IAS 12
- Issued: in 1979; re-issued in 1996, followed by amendments
- Effective date: 1 January 1998
- What it does:
- It defines basic terms, such as accounting profit, taxable profit / loss, current tax, deferred tax, temporary differences, etc.
- It explains a tax base and contains the examples of its computation.
- It sets the recognition criteria of current and deferred tax liabilities and tax assets:
- In relation to deferred tax liabilities arising from taxable temporary differences, IAS 12 requires recognition of deferred tax for all of them with certain exceptions and provides examples and further guidance.
- In relation to deferred tax assets arising from deductible temporary differences, unused tax losses and unused tax credits, IAS 12 requires recognition of deferred tax only to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilized, with certain exceptions.
- It prescribes rules on measurement of deferred tax assets and liabilities, recognition of current and deferred tax income and expense and presentation of current and deferred tax in the financial statements.
- It requires specific disclosures and brings illustrative examples in its appendices.
Articles about IAS 12
- Summary of IAS 12 Income Taxes
- The Unconventional Guide to Tax Bases - very clearly explained how to determine the tax base of assets and liabilities
- Deferred Tax: The Only Way to Learn It - a quick reading for quick understanding of the deferred tax concept.
- Tax Reconciliation under IAS 12 With Example - one of the most difficult numerical disclosures explained clearly step by step
- Tax Incentives - IAS 12 or IAS 20? - when to apply IAS 20 and when to apply IAS 12?
Questions and Answers
- Deferred Tax When Different Tax Rates Apply - How to calculate deferred tax when different tax rates apply to the recovery of the same asset?
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