Periods before legislation is in effect

Disclosure objective

BC107 In periods in which Pillar Two legislation is enacted or substantively enacted but not yet in effect, users of financial statements need information that helps them understand an entity’s exposure to Pillar Two income taxes arising from that legislation. In these periods, the enacted legislation could create exposures that are not yet reflected in the entity’s income tax expense for the period, and users might be unable to understand such exposures from other information an entity discloses in its financial statements. Accordingly, the IASB decided to set a disclosure objective based on this information need.

Information that meets the disclosure objective

BC108 The IASB considered that an entity was likely to be in the process of assessing its exposure and preparing to comply with Pillar Two legislation in periods in which the legislation is enacted or substantively enacted but not yet in effect. Requiring an entity to disclose information reflecting all the specific requirements of the legislation would either not be feasible or be likely to result in undue cost or effort. Consequently, when it exposed draft amendments for comment, the IASB proposed requiring an entity to disclose specific items of information based on the requirements in IAS 12. However, feedback suggested the benefits of disclosing such information might not outweigh the costs of preparing it, particularly because: