Q&A   |   February 2018

 

Q&A: Tax reform in the US (IFRS)

KPMG’s application guidance on the IFRS accounting for tax reform in the US. We consider frequently asked questions.

Applicability

  • All companies affected by US tax reform

Relevant dates

  • December 22, 2017 – Enactment date

Latest developments

This edition of our Q&As supersedes the January 17, 2018 edition, and has been updated to discuss the accounting for:

  • Deductions for foreign-derived intangible income (FDII)
  • Assessments of deferred tax assets when a company expects to be subject to the base erosion anti-abuse tax (BEAT)

Key impacts

  • H.R. 1, originally known as the Tax Cuts and Jobs Act, was enacted on December 22, 2017 and is expected to significantly impact companies’ accounting for and reporting of income taxes, and the related processes and controls
  • This change requires calendar year-end companies to remeasure their deferred tax balances at December 31, 2017. The effects will be recognized consistently with the underlying items to which they relate – in profit or loss, other comprehensive income or directly in equity (backwards-tracing)
  • Fiscal year-end companies will need to determine the effect of the change in rate on their interim financial reporting, including the effect of the phase-in of the new rate over their 2018 fiscal year
  • The Act contains numerous and complex changes to the tax legislation, requiring careful analysis of the accounting under IAS 12
  • The impact of each change in tax law will depend on a company’s specific facts and circumstances, and will need to be analyzed individually
  • In some cases, in applying the new tax law, the impact will be easy to calculate. In other cases, we fully expect that a company will make its best estimate, and may revise that estimate in future periods as a result of new or better information, clarifications of the application of tax laws and/or more experience
  • In all cases, the financial statements should include appropriate disclosures, including relevant information about major sources of estimation uncertainty in applying the new tax law

Webcast

  • Listen to KPMG’s webcast, IFRS implications of US Tax Reform

Report contents

  • Executive summary
  • Corporate rate
  • Tax on mandatory deemed repatriation
  • Other international provisions
  • Other matters
  • Deferred tax assets
  • IFRS compared to US GAAP

Related content


Spotlight on contributors

Valerie Boissou

Valerie Boissou

Partner, Audit, KPMG (US)

+1 212-954-1723
Kayreen Handley

Kayreen Handley

Partner, DPP, KPMG (US)

+1 212-954-8288
Julie Santoro

Julie Santoro

Partner, Department of Professional Practice, KPMG (US)

+1 212-954-1086

 

 

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