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CMA Intermediate · Financial Accounting · Accounting for Taxes on Income (AS 22)

Following the 2026 amendment to AS 22 on Pillar Two model rules of the OECD, which treatment applies to an enterprise subject to Pillar Two income taxes?

As an exception under the amended AS 22, an enterprise should neither recognise nor disclose information about deferred tax assets and liabilities related to Pillar Two income taxes. The Standard still applies to Pillar Two income taxes, but this deferred tax exception covers both recognition and disclosure.

  1. ARecognise deferred tax assets and liabilities, but do not disclose them
  2. BRecognise and disclose deferred tax assets and liabilities related to Pillar Two income taxes
  3. CNeither recognise nor disclose information about deferred tax assets and liabilities related to Pillar Two income taxesCorrect
  4. DRecognise only deferred tax liabilities and disclose them

Explanation

The amended Standard applies to taxes arising from Pillar Two legislation, including qualified domestic minimum top-up taxes. As an exception, the enterprise should neither recognise nor disclose information about deferred tax assets and liabilities related to Pillar Two income taxes. Recognising without disclosing is wrong, since both are excluded.

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