Disclosure Corporate Income Tax
– provides guidance on the disclosure requirements under IFRS for IAS 12 income tax and provides a comprehensive example of a potential disclosures for these income taxes/corporate income tax.
Disclosure corporate income tax – Guidance
Relationship between tax expense and accounting profit
- tax expense and the product of accounting profit multiplied by the applicable tax rate, or
- the average effective tax rate and the applicable tax rate.
The applicable tax rate can either be the domestic rate of tax in the country in which the entity is domiciled, or it can be determined by aggregating separate reconciliations prepared using the domestic rate in each individual jurisdiction. Entities should choose the method that provides the most meaningful information to users.
Where an entity uses option (a) above and reconciles tax expense to the tax that is calculated by multiplying accounting profit with the applicable tax rate, the standard does not specify whether the reconciliation should be done for total tax expense, or only for tax expense attributable to continuing operations. While RePorting Co. Plc is reconciling total tax expense, it is equally acceptable to use profit from continuing operations as a starting point.
Initial recognition exemption – subsequent amortisation
The amount shown in the reconciliation of prima facie income tax payable to income tax expense as ‘amortisation of intangibles’ represents the amortisation of a temporary difference that arose on the initial recognition of the asset and for which no deferred tax liability has been recognised in accordance with IAS 12.15(b). The initial recognition exemption only applies to transactions that are not a business combination and do not affect either accounting profit or taxable profit.