SIC 25 – Income Taxes – Changes in the Tax Status of an Entity or its Shareholders

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Date of issuance: April 2001

Reason of issuance:

The main issues discussed by this SIC are as follows:

i) The tax liabilities may be affected (increased/decreased) as a result of tax status change of shareholders of entity or entity. (Such as change is tax status in case a company is later listed publically or company restructures itself or company moves to another company). Due to this company may be subject to different tax structure (e.g. loss or gain of tax incentive or different rate of tax).

ii) Due to change in tax status of shareholders or entity there may be immediate effect on current tax assets or liabilities. This change in status may also affect deferred tax assets and liabilities.

The issue to be addressed is how company should treat tax effect of change in tax status of shareholder or company.

Consensus:

Any change in status of company or shareholders do not affects (increase/decrease) any amount recorded outside P/L. Any change in deferred and current tax due to change in tax status will be charged/credited in P/L in same period, unless these changes relates to events and transactions, in different or same period, results in direct charge or credit to the recorded amount of equity or OCI. If tax consequence relates to amount recognized in equity or OCI, their tax consequence shall also recognized in equity or OCI as the case maybe.

Effective date: July 15, 2000

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