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IFRS accounting for the effects of the US Tax Cuts and Jobs Act
We consider the IFRS accounting implications of the Tax Cuts and Jobs Act issued in December 2017 in the United States.
The Tax Cuts and Jobs Act (the Act), which President Donald Trump signed into law on 22 December 2017, aims to encourage economic growth and bring back jobs and profits from overseas by reducing US corporate income tax rates, creating a territorial tax system, allowing for immediate expensing of certain qualified property and providing other incentives. The Act also includes various base-broadening provisions (e.g., the elimination of existing deductions) and anti-base erosion provisions. Entities applying International Financial Reporting Standards (IFRS) must apply the relevant guidance in IFRS, in particular, IAS 12 Income Taxes and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
This publication incorporates our views, which are consistent with ESMA’s Public Statement, on the IFRS accounting implications of the Act and is particularly relevant to IFRS reporters that are either Foreign Private Issuers in the US or that have material subsidiaries in the US.