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Draft IFRIC Interpretation DI/2015/1 Uncertainty over Income Tax Treatments

IAS 12 Income Taxes provides requirements on the recognition and measurement of current or deferred tax liabilities or assets, but does not provide specific guidance for how uncertainty about a tax treatment should be reflected in the accounting for income tax.

The draft IFRIC Interpretation proposes that:

(a) an entity should consider uncertain tax treatments individually or together, based on the approach that would provide the better predictions of the resolution of the uncertain tax treatments.

(b) an entity should assume the taxation authority will examine the amounts reported and have full knowledge of all relevant information.

(c) if it is probable the tax authority will accept the tax treatment, the entity shall recognise the amount included in the income tax filings.

(d) if it is not probable the tax authority will accept the tax treatment, the entity uses the most likely amount or the expected value to reflect the effect of uncertainty when recognising and measuring the current and deferred tax assets and liabilities.

(e) an entity shall reassess the judgements and estimates if facts and circumstances change.

To download the Draft Interpretation, click here