Agenda
•
General deferred tax accounting
•
General UTP accounting
•
The new UTP schedule required by the IRS
•
Recent China Tax Law Updates
- Cir 698 – Taxation on oversea indirect equity transfer
- Cir 157 – CIT treatment for NHTEs
- Cir 59 & Public Notice 4 – CIT treatment for corporate restructuring
•
IFRS & CAS status updates
•
SEC Recent Comment on income tax disclosure
•
Q&A
December 1, 2010
2
General Deferred Tax Accounting
December 1, 2010
3
Top restatement Issues for FY’10
Stock Compensation
Revenue Recognition
Liabilities, Payables, Re…
Income Taxes
Financial Instruments
Depreciation, Depletion,…
Debt, Warrants & Equity
Consolidation, Foreign…
Cash Flows
Balance Sheet…
Affiliate Transactions
Accounts/Loans…
2009
2010
0
10
20
30
40
50
December 1, 2010
4
Mechanics of Tax Provision
Current Tax
Provision (Tax
Return) and
changes in ASC
740-10 (FIN 48)
liabilities
Current Taxes
Payable or
Receivable/Noncurrent Taxes
Payable
(Balance Sheet)
+
Deferred Tax
Provision (changes
in net deferred
taxes including
changes in VA)
Deferred Tax Asset
or Liability
(Balance Sheet)
=
Income Tax
Expense (F/S
Provision)
Income Statement
Deferred
Provision
Total
Provision
Current
Provision
December 1, 2010
5
Tax Provision Process
Step 1
Adjust pretax income for permanent
differences.
Step 2
Identify all temporary differences and
carryforwards.
Step 3
Calculate the current income tax
expense or benefit.
Step 4
Recognize deferred tax assets and
liabilities.
Step 5
Assess and adjust for changes in
ASC 740-10 (FIN 48) reserve.
Step 6
Step 7
Evaluate the need for a valuation
allowance for gross deferred tax
assets.
Calculate the deferred income tax
expense or benefit.
December 1, 2010
6
Overview of Deferred Tax
It is important to identify any basis differences that may exist between US
GAAP and Tax. This is why basis difference analyses are often performed in
two steps:
- Identify US GAAP-to-Local GAAP basis differences
- Identify Local GAAP-to-Tax basis differences
US
GAAP
Local
GAAP
Local
Tax
December 1, 2010
7
Deferred tax - Permanent Differences Vs. Temporary Differences
Permanent Differences
(not exhaustive)
• Excessive entertainment expenses
• Employee commercial insurance
• Staff welfare expenses and labor union
fees above deductible limit
• Non-deductible penalties
• Donation to non-charity organization or
charitable donations above deductible
limit
• Sponsor fee
• Management Fee
Temporary Differences
(not exhaustive)
•
•
•
•
•
•
•
•
•
•
Excessive advertisement expenses
Depreciation of fixed assets
Amortisation of intangible assets
Accrued expenses / contingent
liabilities
Provisions
Deductible assets losses
Staff education expenses above
deductible limit
Assets carried at fair value (e.g.
financial assets)
Asset revaluation increments
Investment gain/loss captured under
equity method
December 1, 2010
8
Deferred Taxes – Balance Sheet Approach & Inherent
Assumption Illustrated
Facts:
•
At December 31, 2010, a building used in a company’s manufacturing
operations has:
- Net book value: $1,000
- Net tax value: $600
- Fair market value: $3,000
Questions
a) What is the amount of deferred tax asset or liability that the
company should record for the building (assuming 25% statutory
tax rate)?
b) Would the answer be different if the company asserts that it plans
to sell the building in the near future?
December 1, 2010
9
Deferred Taxes – Balance Sheet Approach & Inherent
Assumption Illustrated (cont.)
Answers:
a)
The amount of deferred tax liability that the company should record is
$100, or the difference between the net book and tax value times the
statutory tax rate of 25%
b)
No, the answer would not be different
ASC 740-10-25-20 (FAS 109, 11), states in part: An assumption inherent in an entity's
statement of financial position prepared in accordance with generally accepted
accounting principles (GAAP) is that the reported amounts of assets and liabilities will
be recovered and settled, respectively. Based on that assumption, a difference between
the tax basis of an asset or a liability and its reported amount in the statement of
financial position will result in taxable or deductible amounts in some future year(s)
when the reported amounts of assets are recovered and the reported amounts of
liabilities are settled.
December 1, 2010
10
Changes in Tax Laws and Rates
•
Companies must recognize the effects of tax law or rate changes in
income tax from continuing operations in the period that includes the
enactment date
•
If changes are enacted after year-end but before issuance of financial
statements, consideration should be given to disclosing the effect on
existing deferred tax assets and deferred tax liabilities in the year-end
financial statements
•
Important to have a process for tracking changes
•
Financial statement tax impact of any changes may be well in advance of
impact on current tax
December 1, 2010
11
What is the Appropriate Accounting for a Tax Holiday?
Issues to consider:
•
What period to account for the effect of the holiday period
- When an application is filed if approval is not needed/assured under the law and
steps required are perfunctory
- When a formal letter is received because approval process is subjective
•
What tax rate to apply to temporary differences that reverse during the holiday
period
- Use the enacted tax rate expected to apply and consider any contingent
requirements (e.g., retroactively revoking benefits if failed to maintain
requirements)
•
How to account for NOLs during the holiday period
- The rate to apply to the NOLs depends on the particular laws in the jurisdiction
- Use the normal rate for the NOLs expected to be utilized before the start of the
holiday period
- Use the holiday rate (e.g., zero rate) for the NOLs expected to be utilized in the
holiday period
December 1, 2010
12
Valuation Allowance
•
The “more likely than not” standard (i.e. > 50% probability) applies when
considering the realizability of deductible temporary differences or tax
attributes
•
Judgmental weighing of positive and negative evidence is necessary
December 1, 2010
13
ASC 740-30-25 (APB 23)
Presumption of repatriation
•
Presumes unremitted earnings will be repatriated
•
Repatriation of earnings – account for a temporary difference unless the
investment can be recovered on a tax-free basis
•
May overcome presumption
•
If satisfy “indefinite reversal criteria”
December 1, 2010
14
Asserting Indefinite Reversal under ASC 740-30-25
(APB 23)
•
Sufficient evidence must show that the subsidiary has invested or will
invest the undistributed earnings indefinitely or that the earnings will be
remitted in a tax-free manner
•
Assertion must be applied on an entity-by-entity basis
•
Specific plans that support the assertion must be documented and
maintained
•
Not sole responsibility of tax department – requires involvement of
treasury, controller, and senior financial management
December 1, 2010
15
Common areas overlooked in tax accounting
Provision to return adjustments
•
Lack of detailed deferred tax analysis when a
company has surplus tax losses
•
Acquisition accounting
•
Applicable tax rate
•
Central journals & GAAP adjustments – tax effecting
adjustments
•
Balance Sheet basis
GAAP
GAAP?
•
Adjustments
Impairment
Income Statement
basis
December 1, 2010
16
General UTP Accounting
December 1, 2010
17
Uncertain Tax Positions – Current Accounting
•
The current guidance, issued in June of 2006 as ASC 740-10 (FIN
48), prescribed a comprehensive accounting model standardizing how entities
should recognize, measure, classify, and disclose uncertain tax positions
•
Effective dates:
- Public companies – effective for fiscal years beginning after December
15, 2006
- Non-public companies – deferral available for certain entities to years
beginning after December 15, 2008
December 1, 2010
18
Uncertain Tax Positions – Scope
•
The guidance for benefits related to UTPs under ASC 740-10 (FIN 48) applies
to “taxes based on income” only
•
Applicable to business entities, not-for-profit organizations and pass-through
entities
•
Applicable to all tax positions taken or expected to be taken on tax returns
(including amended returns and refund claims) in all taxing jurisdictions
(federal, state and foreign)
•
Exposures related to non-income taxes, such as property, VAT and sales taxes
should continue to be accounted for under ASC 450
December 1, 2010
19
“Basics” to Remember – Uncertain Tax Benefits
•
A tax benefit is recognized only if a tax position is MLTN of being
sustained solely on its technical merits
•
A tax benefit is recognized at the largest amount that is MLTN to be
realized (probability analysis)
•
Benefits not recognized are generally recorded as a liability for financial
reporting purposes
•
Be attentive of differences related to interplay between deferred tax
assets and valuation allowances
•
Subsequent recognition, derecognition and measurement is based on
management's best judgment given the facts, circumstances, and
information available at the reporting date
December 1, 2010
20
Uncertain Tax Positions – Six Steps
Prepare disclosures
Accrue interest
and penalties
Determine classification
Measure benefit to be
recognized
Evaluate tax position
for recognition
Identify tax positions and
determine unit of account
Step 6
Step 5
Step 4
Step 3
Step 2
Step 1
December 1, 2010
21
Uncertain Tax Positions – Cumulative Probability
A company takes a UTP in its tax return for a deduction of $100. The
positions meets the MLTN recognition threshold. The company
determines the following possible outcomes and the probability of each:
Amount of tax
benefit
Individual
probability
Cumulative
probability
$100
15%
15%
$80
20%
35%
$60
20%
55%
$40
30%
85%
$20
15%
100%
The benefit to be recognized in the financial statements is $60 because
December 1, 2010
that is the greatest amount that is MLTN to be realized.
22
Uncertain Tax Positions – Disclosures
Uncertain tax benefits (UTBs) related disclosures [ASC 740-10-50-15]
740-10-50-15 (a)
Tabular reconciliation of UTBs at the beginning and end of the year
740-10-50-15 (b)
Amount of UTBs that would impact the effective tax rate
740-10-50-15 (c)
Amount of interest and penalties recognized in the income statement
and balance sheet
740-10-50-15 (d)
Amount of UTBs that may significantly change within 12 months of
the reporting date (“early warning disclosure”)
740-10-50-15 (e)
Description of open tax years by major jurisdiction
740-10-50-19
Policy on classification of interest and penalties
Note: Accounting Standards Update (“ASU”) 2009-6 provides
that non-public companies are not subject to disclosures required
by ASC 740-10-50-15(a) and (b)
December 1, 2010
23
UTB – Tabular Reconciliation
Uncertain tax benefits (UTBs) related disclosures [ASC 740-10-50-15(a)]
740-10-50-15 (a)
A tabular reconciliation of the total amounts of unrecognized tax
benefits at the beginning and end of the period, which shall include:
740-10-50-15 (a)(1)
The gross amounts of the increases and decreases in unrecognized
tax benefits as a result of the tax positions taken during a prior period
740-10-50-15 (a)(2)
The gross amounts of increases and decreases* in unrecognized tax
benefits as a result of tax positions taken during the current period
740-10-50-15 (a)(3)
The amounts of decreases in the unrecognized tax benefits relating
to settlements with taxing authorities
740-10-50-15 (a)(4)
Reductions to unrecognized tax benefits as a result of a lapse of the
applicable statute of limitations
* Should include current year increases only. Drafting flaw subsequently codified
As noted on the previous slide, this disclosure is not applicable by nonpublic companies
December 1, 2010
24
Uncertain Tax Positions – Changes in Recognition and
Measurement
•
An entity shall recognize the benefit of a tax position that was previously
not recognized if :
1. the MLTN recognition threshold is met by the reporting date
2. the tax position is effectively settled through examination, negotiation
or litigation
3. the statute of limitation for the relevant taxing authority to examine and
challenge the tax position has expired
•
A benefit previously recognized should be derecognized in the first period in
which it no longer meets the MLTN recognition threshold
December 1, 2010
25
Effectively Settled – ASC 740-10-25-10 (FIN 48 10(b))
•
Three conditions must exist for a tax position to be considered effectively
settled:
- The taxing authority has completed its examination procedures including
all appeals and administrative reviews that the taxing authority is required
and expected to perform for the tax position
- The enterprise does not intend to appeal or litigate any aspect of the tax
position included in the completed examination
- It is remote that the taxing authority would examine or reexamine any
aspect of the tax position presuming it has full knowledge of all relevant
information
December 1, 2010
26
New Information vs. Change in Judgment
•
A tax position that meets the recognition threshold
- Requires the existence of new information for the associated tax benefit
to be remeasured (ASC 740-10-25-14 (FIN 48 12)
- Does not need to be effectively settled to be remeasured
•
A remeasurement should not occur on the basis of a new evaluation or new
interpretation by management of information
- That was available in a previous financial reporting period,
- Nor should it occur solely on the basis of the taxing authority not
reviewing a specific tax position during the examination
•
Of course, the effective settlement of those tax positions that meet the
recognition threshold would constitute new information for purposes of
remeasurement
December 1, 2010
27
The New UTP Schedule
Required by the IRS
December 1, 2010
28
IRS Schedule UTP - Timeline
JAN 2010
FEB 2010
MAR 2010
APR 2010
MAY 2010
JUN 2010
JUL 2010
AUG 2010
SEP 2010
January 26, 2010
IRS releases Announcement 2010-9
March 5, 2010
IRS releases Announcement
Deadline extended for comments
March 29
June 1, 2010
April 19, 2010
IRS releases:
• Announcement 2010-30
• Draft Schedule UTP
• Draft Schedule UTP instructions
June 1, 2010
Comment period ends
September 9, 2010
IRS issued Notice of Proposed Rulemaking
September 24, 2010
IRS issued:
• Final Schedule UTP and final instructions
• Announcement 2010-75 — Overview of changes from draft instructions to final instructions
• Announcement 2010-76 — Expansion of IRS policy of restraint
• Directive to IRS field personnel setting forth the IRS’s planned treatment of Schedule UTP by examiners and other IRS personnel
December 1, 2010
29
Who Must File Schedule UTP
•
Files one of the following forms:
- Form 1120, U.S. Corporation Income Tax Return
- Form 1120 F, U.S. Income Tax Return of a Foreign
Corporation
- Form 1120 L, U.S. Life Insurance Company Income Tax
Return
- Form 1120 PC, U.S. Property and Casualty Insurance
Company Income Tax Return
A company
must file
if it:
•
Has assets equal to or exceeding
- TY2010 $100 million
- TY2012 $ 50 million
- TY2014 $ 10 million
•
Issued (or a related party issued) audited financial statement
(including those filed under U.S. GAAP and IFRS) that covers
all or a portion of the company’s operations for the company’s
tax year
•
Has one or more tax positions that must be reported on
Schedule UTP
December 1, 2010
30
What Uncertain Tax Positions Must Be Disclosed?
Recorded a
No reporting if tax position is immaterial or
reserve in audited • sufficiently
certain under applicable
financial
financial accounting standards
statements
No reserve
• Probability of settling with the IRS is <50%
recorded because • Intend to litigate
company expects • MLTN to prevail on merits in litigation
to litigate position
•
Tax position taken on a return – would result in adjustment to a line item on that return if not sustained
‒ Based on the unit of account used to prepare the audited financial statements
‒ If multiple tax positions affect a single line on the return, each position must be reported separately
December 1, 2010
31
Elements of Disclosure
Pass
through
EIN
Major tax
position
Ranking
Transfer
pricing or
other
Timing
Codes
Code
section
UTP
disclosure
Concise
description
December 1, 2010
32
Recent China Tax Law Updates
December 1, 2010
33
PRC Taxation on Overseas Indirect Equity Transfers
Guoshuihan [2009] No. 698 (“Circular 698”):
•
The State Administration of Taxation (“SAT”) issued Circular 698 on
December 10, 2009 to scrutinize indirect transfers by non-PRC Tax
Resident Enterprises (“Non-TREs”) of their equity interests in PRC
companies by disposing the shares in offshore Special Purpose Vehicles
(“”SPVs”).
•
Circular 698 imposes a reporting obligation on certain indirect transfers.
•
It stipulates how to apply General Anti-Avoidance Rule (“GAAR”)
provisions based on the assessment of the documents and information
reported by the Non-TRE investors.
December 1, 2010
34
Jiangdu Case - Observations
The Jiangdu Case:
• A local-level state tax bureau in Jiangdu (“Jiangdu STB”) of Jiangsu
Province collected a significant amount of PRC tax (RMB 173 million) on
the transfer gain derived by a Non-TRE investor from indirectly transferring
the equity of a PRC joint venture company (“JV”) through disposing its
shares in a Hong Kong intermediate holding company.
• The first published case of a successful attack by the PRC tax authorities
on indirect transfer since the issuance of Circular 698.
• Largest single sum of PRC withholding income tax collected by the PRC
tax authorities of such nature.
• This shows that the PRC tax authorities are taking an aggressive approach
to detect the indirect transfer and assess the “commercial purpose” and
“substance” of such a transfer. Public announcements and media
coverage are a few of the sources where tax authorities can collect
information from.
December 1, 2010
35
Circular 698 and Jiangdu Case – Tax Accounting
Considerations
Observations:
•
It might be necessary to review the current ASC 740-10 (FIN 48) reserve
to determine if any adjustments need to be made in light of the Jiangdu
Case.
•
Review the tax treatments in their respective home jurisdictions and
determine if PRC tax so paid will be eligible for the foreign tax credits or
deductions in the home jurisdictions. It is possible that the tax paid may be
regarded as “voluntary tax” and thus not be eligible for the foreign tax
credit or deduction in the home jurisdiction of a Non-TRE.
•
It is important to pay careful attention to tax related disclosures in financial
statements and public announcements.
December 1, 2010
36
Transitional CIT Treatments for New/High Technology
Enterprises
Guoshuihan [2010] No. 157 (“Circular 157”)
• It was issued in April 2010 to clarify the CIT treatments of tax incentives
available to old enterprises established prior to promulgation of the new
CIT law, especially those New/High Technology Enterprises (“NHTEs”) .
• The Circular clarified the applicable CIT rate for NHTEs as well as
preferential tax rate for certain projects under CIT regime.
December 1, 2010
37
CIT Treatments for NHTEs – Tax Accounting
Considerations
Observations:
• It is important for old NHTEs to review and assess their eligibility for the
transitional tax treatments or preferential tax treatment under the new
Circular to determine the appropriate tax rate.
• A tax resident enterprise that does not qualify as an NHTE may receive
income from certain preferential projects. The enterprise shall separately
account for the current and deferred income taxes for these projects using
the applicable tax rate for each project.
• As different in-charge local-level tax bureaus may interpret relevant tax
rules differently, it is advisable for NHTEs to closely monitor the local
implementation of such rules and assess the need for any ASC 740-10
(FIN 48) reserve.
December 1, 2010
38
PRC Corporate Income Tax (“CIT”) Treatments for
Corporate Restructuring
Caishui [2009] No. 59 (“Circular 59”):
• The SAT and Ministry of Finance (“MOF”) jointly issued Circular 59 in April
2009
• Setting out the framework and rules for CIT treatments in relation to corporate
restructuring
• A number of unclear issues, both technical and procedural
December 1, 2010
39
PRC Corporate Income Tax (“CIT”) Treatments for
Corporate Restructuring
Guojiashuiwuzongjugonggao [2010] No. 4 (“Public Notice 4”):
• It was issued on July 26, 2010, under the title of “The Administrative
Measures of Corporate Income Tax Treatments for Corporate Restructuring”
which was effective from January 1, 2010
• Public Notice 4 provides:
- Detailed guidance on documentation and procedural requirements for all
types of corporate restructuring under both the general tax treatments
(“GTT”) and special tax treatments (“STT”) – tax deferral treatment
- Transitional requirements for corporate restructuring which took place in
2008, 2009 and up to the time of the release of the Notice
- Clarification of a few issues, such as grandfathering of tax incentives, tax
ramifications of breach of the STT criteria and limitation of tax loss
carryforward, etc.
December 1, 2010
40
Circular 59 & Public Notice 4 – Tax Accounting
Considerations
Observations:
• It is imperative to assess the ASC 740-10 (FIN 48) implications of any
transactions with STT election in light of new record-filing requirements and
“confirmation” process by in-charge tax authorities.
• For transactions qualify as STT, it is important to determine the tax accounting
implications including determination of beginning deferred tax
balances, applicable tax rate, accounting for unused incentives and limitation
on the utilization of tax loss carryforward.
• It is important to determine the tax accounting treatment of GTT transactions
including step-up of tax basis.
December 1, 2010
41
IFRS & CAS Status Updates
December 1, 2010
42
IFRS Adoption and Conversion – Key Asian Regions –
Local GAAP to IFRS Timeline
Asian Pacific
regions
already
adopted
•
•
•
•
•
•
•
•
•
•
•
Australia
Fiji
Hong Kong
Iraq
Kuwait
Lebanon
Mongolia
Nepal
New Zealand
Oman
The People’s
Republic of China*
• … and more
2011
KOREA
Full adoption on or
after 1 January 2011.
THAILAND
SET50 companies
must
adopt on or after
2011.
INDIA
Certain listed
companies and
companies with
turnover over of
US$200m must
adopt on or after
2011.
2012
2013
TAIWAN
Phase 1 companies
(e.g. listed companies
& financial institutions
supervised by the
FSC) starting on
1 January 2013.
Phase 2 companies
(e.g. unlisted
companies and credit
card
companies), optional
early adoption from 1
January 2013.
2014
2015 and
beyond
JAPAN
Proposed adoption
for listed companies
from 2015/2016.
TAIWAN
Phase 2 companies
starting on 1 January
2015.
THAILAND
SET100 companies
must adopt on or after
2013.
* The China Accounting Standards for listed companies are similar to IFRS but with a number of differences to reflect specific circumstances in the
People’s Republic of China.
December 1, 2010
43
Regulatory timeline
Representative U.S. Timeline*
2010: SEC
begins work
on workplan
for moving
forward with
IFRS in the U.S.
2010
If a company
converts at
December
31, 2015: January
1, 2013 Beginning
of the first
comparative
IFRS year
2011: SEC to
decide whether
to mandate IFRS
2011
2012
2013
If mandated:
December 31,
2015 annual
financial
statements issued
using IFRS
2014
transition date
2015
reporting date U.S. GAAP financial statements (through third-quarter 2015)
IFRS financial statements
Dual reporting period
IFRS assessment and preparation
IFRS reporting
* Representative timeline for illustrative purposes only. SEC to determine if and when conversion will be required in 2011.
December 1, 2010
44
IFRS Adoption and Conversion –
SEC Publishes Progress Report on IFRS Work Plan
SEC published the first draft progress report on its Work Plan for global accounting
standards on October 20, 2010.
• Observations
- SEC is in the process of evaluating comprehensiveness and comparability of
IFRS;
- SEC is analyzing the feedback received from public comments to understand
the impact on issuers;
- Plan to meet with accounting firm, foreign regulators and others to
understand the potential impact on audit quality, cost and competitiveness.
• What’s next?
- SEC expects to continue to report periodically on the status of the Work Plan
until its expected decision in 2011.
December 1, 2010
45
IASB - Accounting for Income Taxes
2002 - Joint “Limited Scope”
Income Tax Accounting
project added to agenda of
both FASB and IASB
2008 - FASB ceases
working on the project
October 2009 - IASB
discusses comments
received on the IAS 12
exposure draft, many
critical of proposals.
Decides not to proceed
with proposals in ED.
March 2009 - IASB issued an exposure draft to
replace IAS 12 to improve and partially converge
with U.S. GAAP
July 2010 – IASB
decides to expose
an exception for R/E
measured at fair
value, other
proposals to follow
March 2010 - IASB adds limited scope project
to address practice issues and to consider
some proposals from ED that were positively
received
December 1, 2010
46
New CAS by Foreign Investment Enterprises
•
New China Accounting Standards (“CAS”) issued by the Ministry of
Finance (“MOF”) on 15 February 2006
•
Application Guidance issued on 30 October 2006
•
Accounting Standard Interpretation No.1 to 4 issued from November
2007 to August 2010
•
Implementation Guidance of Accounting Standards issued on
December 2008 and the Opinions of the Expert Task Force on the
implementation of CAS.
December 1, 2010
47
Timetable of Adopting CAS by Foreign Investment
Enterprise (“FIE”)
•
•
No specific timetable from the MOF as of today
Shanghai Municipal Bureau of Finance
“All of the non-listed medium and large enterprise in Shanghai should
adopt CAS no later than 2011. In addition, at least 50% of them shall
adopt CAS from 2010.”(Hucaikuai[2010]No 8)
December 1, 2010
48
SEC Recent Comment on Income
Tax Disclosure
December 1, 2010
49
SEC Recent Comment on Income Tax Disclosure
•
Income taxes have been identified as the primary source of material
weaknesses by the SEC for US listed groups
•
Assess the recoverability of deferred tax assets
•
Effective tax rate (ETR) reconciliation and forecast
•
The SEC continue to focus on the transparency of disclosures by listed
company
December 1, 2010
50
SEC Recent Comment on Income Tax Disclosure (cont.)
•
On November 12, an SEC official said that the SEC is monitoring public company
tax disclosures involving pretax foreign and domestic income and effective rate
reconciliations and is finding some irregularities.
- Regulation S-X of the Securities and Exchange Act of 1934 requires that a
company's pretax income be divided between domestic and foreign income
- However, not all companies are providing that information in a transparent
manner (that investors should be able to determine the tax provision that
corresponds with foreign income and the provision that corresponds with
domestic income)
- In its review of effective tax rate reconciliation disclosures, the commission
has frequently seen a large item identified as a "tax rate differential" in public
company financial statements – resulting in comment letters where
companies are asked what financial items are included in that caption -whether it refers to a tax rate differential between foreign and domestic
income, or if it includes other items as well
December 1, 2010
51
Questions?
December 1, 2010
52