ESMA draws issuers’ attention to IAS requirements following introduction of new tax legislation in the US

On 26 January 2018, following the signing of the United States Tax Cuts and Jobs Act (the Act), significant changes in US tax laws took effect on 1 January 2018. The European Securities and Markets Authority (ESMA) became aware of concerns expressed by EU issuers with respect to the accounting for the effects of the Act in their IFRS financial statements.

In order to avoid the risk of inconsistent application of IFRS in the EU, ESMA reminded issuers of their obligations under IAS 12 Income Taxes. Under IFRS there is no relief from these requirements, even to deal with circumstances in which complex legislation is substantively enacted shortly before the year-end.

ESMA, together with National Competent Authorities, will monitor the level of transparency that issuers provide in their financial statements about the accounting for the effects of the Act and changes in estimates resulting from its implementation.