FASB Clarifies the Deferred Tax Treatment of the GloBE Rules

Yesterday, the Financial Accounting Standards Board (FASB) issued a Tentative Decision on the treatment under US GAAP of deferred taxes for the GloBE minimum tax. 

This follows the International Accounting Standards Board that issued an Exposure Draft on January 9, 2023 that proposed:

• a temporary exception to accounting for deferred taxes arising from the implementation of the Pillar Two model rules; and
• targeted disclosure requirements

The decision of the FASB follows a number of enquiries from accounting firms as to whether an entity should record deferred taxes for the GloBE minimum tax by recognizing GloBE-specific deferred taxes or re-measuring existing deferred taxes at the 15% GloBE minimum tax rate.