Monday, September 29, 2008

Will your company be paying more or less taxes under IFRS?

I just finished listening to a very interesting webcast presented by Ernst &Young in the USA. The webcast dealt with the conversion considerations under IFRS for automotive companies. The presentation was very heavy on the non accounting aspects of IFRS. One area of particular interest was the tax implications of the IFRS conversions.

Will there be an impact on the taxes you actually pay when you adopt IFRS?

The involvement of the tax experts is an essential part of any IFRS conversion. It is better to avoid nasty surprises.

Clearly tax advisers are needed to consider these possible cash tax impacts as well as the potential changes in measuring and disclosing tax effects. You will need to consider all the jurisdictions in which you operate both domestic and foreign. Tax planning is a must! Get thee to your tax advisers as soon as possible!

Even if you are not in the automotive industry you might want to listen to the webcast. The webcast will be archived on the E&Y Thought Centre site in a week or so. You will have to register on the site to listen to it.

This cash tax effect is definitely a potential devil in the details!

(Some hints - will there be some jurisdictions that require book and tax to be equal for at least some items, what about the effects on capital calculations?)

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