Pillar 2 Tax Reform – Financial Reporting Consequences

Australia has passed legislation to implement the OECD’s Pillar 2 global minimum tax rules, which apply a 15% minimum effective tax rate to large multinational groups with annual global revenue of at least EUR 750 million.  Note the threshold is Euro based and therefore will vary depending on exchange rate movements (at the time of writing, this is AUD$1.3bn).

This article is not intended to provide tax updates or details on the scheme, however it is important to be aware of this recent tax change which could have some financial reporting implications for certain entities.

AASB 112 Income Taxes has been amended for the Pillar 2 reform and requires an entity to factor this into current tax calculations, there is an exemption for deferred tax.

From a financial reporting perspective, entities will need to think about:

• Whether they are affected by the regime
• If so, whether any additional tax provisions are required in the financial statements – the financial statement deadline is likely to be prior to the tax return lodgement deadline and therefore discussions with group entities and tax advisors will be needed
• Relevant disclosures needed in accordance with AASB 112.88A – 88D

Want to know more about how Bentleys can help you?

For assistance with your financial reporting requirements, contact your local Bentleys audit and assurance advisor. We’re here to help you get where you want to be.