Table of Contents
In April 2001 the International Accounting Standards Board adopted SIC-25 Income Taxes
—Changes in the Tax Status of an Entity or its Shareholders, which had originally been issued
by the Standing Interpretations Committee of the International Accounting Standards
Committee in July 2000.
SIC Interpretation 25 Income Taxes—Changes in the Tax Status of an Entity or its
Shareholders (SIC-25) is set out in paragraph 4. SIC-25 is accompanied by a Basis for
Conclusions. The scope and authority of Interpretations are set out in the Preface to IFRS
FOR THE BASIS FOR CONCLUSIONS, SEE PART C OF THIS EDITION
• IAS 1 Presentation of Financial Statements (as revised in 2007)
• IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
• IAS 12 Income Taxes
A change in the tax status of an entity or of its shareholders may have
consequences for an entity by increasing or decreasing its tax liabilities or
assets. This may, for example, occur upon the public listing of an entity’s
equity instruments or upon the restructuring of an entity’s equity. It may also
occur upon a controlling shareholder’s move to a foreign country. As a result
of such an event, an entity may be taxed differently; it may for example gain
or lose tax incentives or become subject to a different rate of tax in the future.
A change in the tax status of an entity or its shareholders may have an
immediate effect on the entity’s current tax liabilities or assets. The change
may also increase or decrease the deferred tax liabilities and assets recognized
by the entity, depending on the effect the change in tax status has on the tax
consequences that will arise from recovering or settling the carrying amount
of the entity’s assets and liabilities.
The issue is how an entity should account for the tax consequences of a
change in its tax status or that of its shareholders.
A change in the tax status of an entity or its shareholders does not give rise to
increases or decreases in amounts recognized outside profit or loss. The
current and deferred tax consequences of a change in tax status shall be
included in profit or loss for the period, unless those consequences relate to
transactions and events that result, in the same or a different period, in a
direct credit or charge to the recognized amount of equity or in amounts
recognized in other comprehensive income. Those tax consequences that
relate to changes in the recognized amount of equity, in the same or a
different period (not included in profit or loss), shall be charged or credited
directly to equity. Those tax consequences that relate to amounts recognized
in other comprehensive income shall be recognized in other comprehensive
This consensus becomes effective on 15 July 2000. Changes in accounting policies shall be
accounted for in accordance with IAS 8.
IAS 1 (as revised in 2007) amended the terminology used throughout IFRSs. In addition it
amended paragraph 4. An entity shall apply those amendments for annual periods
beginning on or after 1 January 2009. If an entity applies IAS 1 (revised 2007) for an
earlier period, the amendments shall be applied for that earlier period.