Defining Issues | December 2023

Insight

FASB issues ASU to disaggregate income tax disclosures

The ASU enhances income tax disclosures for the effective tax rate reconciliation and income taxes paid.

Matt Drucker

Matt Drucker

Partner, Dept. of Professional Practice, KPMG US

+1 212-872-3584

Jennifer Yruma

Jennifer Yruma

Executive Director, Department of Professional Practice, KPMG US

+1 212-909-5829

ASU 2023-09 enhances annual income tax disclosures to address investor requests for more information about the tax risks and opportunities present in an entity’s worldwide operations.

Applicability

  • All entities subject to the income tax disclosure requirements

Relevant dates

Effective date

Public business entities

All other entities

Annual periods – Fiscal years beginning after                                                             

Dec 15, 2024

Dec 15, 2025

 

Early adoption for annual financial statements not yet issued or made available for issuance.

 

Key impacts

The ASU enhances income tax disclosures by requiring entities to disclose:

  • For public business entities, a tabular reconciliation using both percentages and amounts, broken out into specific categories with certain reconciling items at or above 5% of the statutory (i.e. expected) tax further broken out by nature and/or jurisdiction.
  • For all other entities, qualitative disclosure of the nature and effect of significant reconciling items by specific categories and individual jurisdictions.
  • Income taxes paid (net of refunds received), broken out between federal (national), state/local and foreign, and amounts paid to an individual jurisdiction when 5% or more of the total income taxes paid.

The ASU also includes other amendments, such as replacing the term ‘public entity’ with ‘public business entity’ and the removal of certain disclosures. 

Report contents

  • Source and applicability
  • Fast facts, impacts, actions
  • Enhancements and other changes
  • Tabular rate reconciliation for PBEs
  • Transition
  • Effective date

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