Uncertain tax treatments in IAS 12 and IFRIC 23

Uncertain tax treatments

Uncertain tax treatments – In short

Neither IAS 12 Income Taxes nor IFRIC 23 Uncertainty over Income Tax Treatments (the Interpretation) contain explicit requirements on the presentation of uncertain tax liabilities or assets in the statement of financial position.

This has led to diversity in practice. Some entities present uncertain tax liabilities as current (or deferred) tax liabilities and others include these balances within another line item such as provisions.

In September 2019, in response to a request for clarification on this matter, the IFRS Interpretations Committee (the IFRS IC or the Committee) published an agenda decision. The Committee concluded that an entity is required to present uncertain tax liabilities as current tax liabilities or deferred tax liabilities; and uncertain tax assets as current tax assets or deferred tax assets.

Based on an earlier agenda decision, the impact of uncertain tax treatments that meet the definition of income taxes should be presented in the statement of profit or loss in the line item ‘tax expense’.

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Notes to the financial statements

Notes to the financial statements that contain information in addition to the statement of financial position, of financial performance, of changes in equity