The European Association of Cooperative Banks (EACB) gladly takes the opportunity to comment on the IASB consultation about the Deferred Tax which is related to Assets and Liabilities arising from a Single Transaction (amendments to IAS 12).
The EACB welcomes the IASB's effort to address the current diversity in initial recognition exemption of deferred tax for single transactions that give rise to an asset and liability. Currently, in some cases, the exemption is applied, and in other cases it is not. Under the proposed IASB amendments, the exemption in the IAS 12 would not apply to leases and decommissioning obligations—transactions for which companies recognize both an asset and a liability. The proposed amendments would result in companies recognizing deferred tax on such transactions.
EACB sees merit in the IASB's approach ('gross method'), which considers the unit of account in IAS 12 as being the asset and the liability rather than a single transaction but we disagree with the IASB´s recommendation concerning the recognition ‘cap’ for a deferred tax liability because of the consequences of this proposal in subsequent periods.