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Commission Regulation (EC) No 1725/2003 of 29 September
2003 adopting certain international accounting standards
in accordance with Regulation (EC) No 1606/2002 of the
European Parliament and of the Council.
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Income taxes - changes in the tax
status of an enterprise or it's shareholders
Paragraph 11 of IAS 1 (revised 1997), presentation of
financial statements, requires that financial statements
should not be described as complying with International
Accounting Standards unless they comply with all the
requirements of each applicable standard and each applicable
interpretation issued by the Standing Interpretations
Committee. SIC interpretations are not intended to apply to
immaterial items.
Draft interpretation SIC-D21, income taxes - omnibus was
issued for comment in September 1999. The draft interpretation
included both the issue addressed in this interpretation and
the issue included in interpretation SIC-21, income taxes -
recovery of revalued non-depreciable assets.
Reference: IAS 12, income taxes (revised 1996).
Issue
1. A change in the tax status of an enterprise or of its
shareholders may have consequences for an enterprise by
increasing or decreasing its tax liabilities or assets. This
may, for example, occur upon the public listing of an
enterprise's equity instruments or upon the restructuring of
an enterprise's equity. It may also occur upon a controlling
shareholder's move to a foreign country. As a result of such
an event, an enterprise may be taxed differently; it may for
example gain or lose tax incentives or become subject to a
different rate of tax in the future.
2. A change in the tax status of an enterprise or its
shareholders may have an immediate effect on the enterprise's
current tax liabilities or assets. The change may also
increase or decrease the deferred tax liabilities and assets
recognised by the enterprise, depending on the effect the
change in tax status has on the tax consequences that will
arise from recovering or settling the carrying amount of the
enterprise's assets and liabilities.
3. The issue is how an enterprise should account for the
tax consequences of a change in its tax status or that of its
shareholders.
Consensus
4. A change in the tax status of an enterprise or its
shareholders does not give rise to increases or decreases in
amounts recognised directly in equity. The current and
deferred tax consequences of a change in tax status should be
included in net profit or loss for the period, unless those
consequences relate to transactions and events that result, in
the same or a different period, in a direct credit or charge
to the recognised amount of equity. Those tax consequences
that relate to changes in the recognised amount of equity, in
the same or a different period (not included in net profit or
loss), should be charged or credited directly to equity.
Date of consensus: August 1999.
Effective date: this consensus becomes effective on 15 July
2000. Changes in accounting policies should be accounted for
according to the transition requirements of IAS 8.46.
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