Deloitte Examines IFRS Tax Implications

Corporate tax executives need to closely watch other countries' transition to International Financial Reporting Standards as it could affect their global tax planning, warns a report issued by Deloitte.

The Deloitte report, "Global Tax Implications of International Financial Reporting Standards," discusses how companies should prepare for the implications of the transition to IFRS in each country in which they operate. For example, changes to equity as a result of adoption of IFRS may impact the ability of a subsidiary to deduct interest expense for tax purposes, thereby putting pressure on a company's financing strategy.

Other issues to consider, and covered in the paper, include hybrid instruments, foreign currency gains and losses, amortization, transfer pricing and repatriation.

"For multinational companies, IFRS is a beneficial global trend with significant momentum," said Dan Lange, global managing partner of International Income Taxes for Deloitte Tax LLP, in a statement. "Tax departments must successfully integrate this new set of standards into their global tax planning methodology in a way that maximizes the tax benefits of this transition but mitigates the risks that can arise from the differences between tax reporting rules and IFRS."