What international accounting standard addresses accounting for income taxes? The answer is IAS 12.
Issued by the International Accounting Standards Board, IAS 12, “Income Taxes,” sets out how entities account for current tax and deferred tax under IFRS. Current tax generally reflects amounts payable to or recoverable from tax authorities for the current and prior periods.
Its best-known feature is deferred-tax accounting. IAS 12 requires companies to recognize tax effects arising from temporary differences between an asset or liability’s accounting carrying amount and its tax base, subject to specified exceptions. This helps match tax consequences with the transactions that create them.
A common mix-up is IFRS 15, which covers revenue from contracts with customers, and IAS 16, which covers property, plant and equipment. IAS 12 originated in earlier international standards: an original version appeared in 1979, while the current standard was issued in 1996 and adopted by the IASB in 2001.