
Turkey Gazettes Pillar 2 IASB Amendments
On September 19, 2023, Turkey gazetted the Pillar 2 amendments to IAS 12, as previously announced by the IASB.
Whilst the treatment of investment property for financial accounting purposes is important when determining the GloBE treatment, of even more importance are any differences between the financial accounting treatment and the domestic tax treatment. In many cases, it is these differences that (subject to GloBE adjustments) will be a determining factor for a low GloBE ETR.
A number of different accounting standards apply to investment property under IFRS. In particular, the acquisition and construction of real estate that is held as investment property is governed by:
IAS 40 (Investment property);
IAS 16 (Property, plant and equipment);
IAS 23 (Borrowing costs); and
IFRS 13 (Fair Value Measurement)
Under IAS 40, entities can adopt either the fair value model or the cost model as their accounting policy for subsequent measurement of investment property. The policy selected must be applied to all their investment property.
Under the fair value model investment property is revalued at the end of each accounting period with unrealised gains and impairment losses being taken directly to the profit and loss account. When a property is sold the base cost for calculating the gain or loss for financial accounting purposes is this carrying value.
This differs significantly from the tax treatment with most jurisdictions using a cost model with changes in fair value ignored.
The fair value model can lead to temporary differences that would result in deferred tax assets or liabilities. Fair value increases for financial accounting purposes would result in a deferred tax liability (ie Dr Deferred Tax P&L, Cr Deferred Tax Liability) that would increase the tax charge in the P&L. Impairment losses would result in a deferred tax asset.
Similarly, enhanced tax depreciation rates can also result in deferred tax liabilities.
GloBE Adjustments
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On September 19, 2023, Turkey gazetted the Pillar 2 amendments to IAS 12, as previously announced by the IASB.
The definition of CFC taxes that are restricted in the GloBE rules is much narrower than under many domestic CFC regimes. In this article we look at this issue.
The Pillar Two rules don’t just apply to companies. They apply to ‘entities’. This means that the Pillar Two GloBE rules can apply to both trusts and foundations.
Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Italy for accounting periods beginning on or after 31 December, 2023.
On September 11, 2023, the Italian Ministry of Finance issued a draft law for the implementation of the EU Global Minimum Tax Directive. Read our detailed review.
The GloBE rules include a number of insurance specific adjustments. In this article we look at the nature of these provisions as well as the impact of the GloBE rules on insurance companies generally. Updated for OECD Administrative Guidance.
We have tracked the draft and enacted domestic laws issued to date back to both sets of OECD Administrative Guidance in this matrix for our members. This will be constantly updated as new or amended legislation is issued.
The requirements for a participation exemption under domestic law may not match the exemption requirements in the Pillar Two Rules. Read our analysis.
Analysis of the domestic implementation of the Pillar Two Global Minimum Tax rules in Germany from 2024. Updated for the August 16, 2023 Draft Law.
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