FRSC Issues for Comment Proposed New Standard on Income Tax
The Financial Reporting Standards Council (FRSC) has issued an Invitation to Comment on an exposure draft a proposed new standard on the accounting for income tax issued by the International Accounting Standards Board (IASB). If adopted, the standard would replace the existing requirements in IAS 12, Income Taxes.
The proposed standard retains the basic approach to accounting for income tax, known as the temporary difference approach. The objective of that approach is to recognize now the future tax consequences of past events and transactions, rather than waiting until the tax is payable.
Although the proposed standard retains the same principle, the IASB proposes to remove most of the exceptions in IAS 12, to simplify the accounting and strengthen the principle in the standard. In addition, the IASB proposes a changed structure for the standard that will make it easier to use.
Introducing the exposure draft, Sir David Tweedie, Chairman of the IASB, said:
Income tax requirements differ considerably from jurisdiction to jurisdiction. The application of the existing requirements to these different circumstances can be difficult, resulting in complex and potentially diverse interpretations. Our aim is to achieve a clearer, more principle-based standard that will make the accounting requirements on income tax easier to understand and apply and will also result in more consistent reporting.
The proposals are set out in the exposure draft Income Tax. The FRSC invites comments on the exposure draft by
15 July 2009. Comments may also be sent electronically through the open for comment section at
www.iasb.org on or before
31 July 2009, the IASB comment deadline.
The FRSC Invitation to Comment and the IASB exposure draft may be downloaded from the FRSC/PFRS website within the PICPA website at
www.picpa.com.ph. The IASB exposure draft is also available on the open for comment section at
www.iasb.org.