EFRAG’s Final Comment Letter on the IASB’s ED International Tax Reform – Pillar Two Model Rules

The European Financial Reporting Advisory Group (EFRAG) has published its response letter to the International Accounting Standards Board (IASB) regarding the Exposure Draft ED/2023/1 International Tax Reforms – Pillar Two Model Rules.
EFRAG supports the IASB’s proposal to provide a mandatory temporary exception for the requirements in IAS 12 Income Taxes, under which entities should neither recognise nor disclose information about deferred tax assets and liabilities related to Pillar Two income taxes.
EFRAG also supports the IASB’s efforts to define a disclosure approach that would provide information to users of financial statements to assess an entity’s exposure to paying top-up tax that would not involve undue cost or effort.
However, EFRAG encourages the IASB to use a more principle-based and less prescriptive approach to request information to assess an entity’s exposure to paying top-up tax, which would enable entities to provide their own quantitative assessment of their exposure to paying top-up tax prepared under Pillar Two model rules.
Finally, given the absence of an end date for the temporary exception introduced by the Proposed Amendments, EFRAG recommends that the IASB schedules in its workplan an activity of review, so that the exception may be terminated, or retained as permanent, at the appropriate moment.
—
Specific answers to the consultation questions can be found in the annex to the letter.