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By Stephen Bouvier
LONDON—The International Accounting Standards Board announced March 31 it is seeking comments on proposals to replace its income tax accounting standard.
In a press notice, IASB Chairman David Tweedie said IASB's aim in replacing the existing International Accounting Standard 12,Income Taxes, “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 board has said it will hold a Webcast on the proposed standard “soon.” IASB staff have posted a flowchart and examples on the IAS 12 project page. Comments are due July 31, 2009.
Under the new proposals, IASB said it wants to retain the temporary differences approach to income tax accounting while at the same time removing the exceptions found in IAS 12 at the moment.
Applying a temporary difference approach, an entity would recognize the tax consequences of an event immediately instead of waiting for tax or an allowance to be paid.
Although the proposals retain IAS 12's approach to income taxes, the introduction to the new standard lists no fewer than 14 changes.
Part of Convergence Effort
IASB's work on income taxes forms part of its convergence effort with the U.S. Financial Accounting Standards Board to reduce the differences between international financial reporting standards and U.S. generally accepted accounting principles.
As the basis for their work on tax accounting, the two boards agreed to eliminate the various exemptions available under both IAS 12 and Statement of Financial Accounting Standard 109, Accounting for Income Taxes.
According to the introduction to the exposure draft, FASB has said “it will solicit input from U.S. constituents by issuing an Invitation to Comment containing the IASB's proposed replacement of IAS 12.”
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