Publication of an amendment to the FSA’s regulatory notice concerning the „designated IFRSs“

The FSA has issued an amendment to the regulatory notice regarding the „designated IFRSs“ in the “Regulation for Terminology, Forms, and Preparation of Consolidated Financial Statements“.
The amendment designates international accounting standards, including IAS 12, published by the IASB on 24 May 2023, as the „designated international accounting standards“ under Article 93 of the Regulation on Consolidated Financial Statements.
The amendment focuses on revising the „Specification of corporate accounting standards established by the Commissioner of the Financial Services Agency“ under the Ordinance Concerning Terminology, Forms, and Preparation Methods of Consolidated Financial Statements. It specifies that International Accounting Standards issued by the IASB will be considered the Designated International Accounting Standards as stated in Article 93 of the Ordinance.
A significant change includes the adoption of the revised International Accounting Standard No. 12, „Corporate Income Tax,“ announced by the IASB on 23 May 2023. This revision incorporates the Pillar 2 (Global Minimum Taxation) model rules of the BEPS project by the OECD, along with a temporary exception to accounting for deferred tax under US tax laws.
Following the enactment of the „Law for Partial Revision of the Income Tax Law“ in Japan on 28 March 2023, companies subject to the designated international accounting standards must promptly apply the revised International Accounting Standard No. 12, „Corporate Income Taxes,“ if their fiscal year ends after the revised Corporate Tax Law’s enactment date. This requirement is particularly relevant for companies with a fiscal year-end in March, as their consolidated financial statements in securities reports must be submitted by the end of June.
Given the urgency to issue necessary administrative orders for public interest, this amendment falls under Article 39, Paragraph 4, Item 1 of the Administrative Procedure Act. As a result, the FSA did not conduct the procedure for soliciting public comments, as outlined in the same law. It is important to note that no public consultation was carried out due to the exemption provided by the „Administrative Procedures Act“ for cases where following public consultation procedures would be challenging due to the urgent nature of establishing Administrative Orders for the public interest.