Income Tax Provision Template (IAS 12, ASC 740, ETR Reconciliation)
Tax provision workpaper: rates, current tax, deferred tax roll-forward, DTA recoverability, uncertain positions, ETR reconciliation, Pillar Two, disclosures
使い方: Use it at each year end and interim reporting date to compute and document current and deferred tax and the tax note. Fill the rate table with enacted or substantively enacted rates first, then entity current tax and the deferred tax roll-forward. The main pitfall is an ETR reconciliation with a large unexplained 'other' line or a deferred tax plug that hides errors.
プレビュー
Income Tax Provision: [Group name] [Period end YYYY-MM-DD]
Income tax provision checklist and workpaper for annual and interim financial statements: scope and timetable, current tax computation, temporary differences and deferred tax roll-forward, deferred tax asset recoverability, uncertain tax positions, effective tax rate (ETR) reconciliation, Pillar Two top-up tax, interim tax, journal entries, disclosure checklist, review and sign-off. Structure aligned with IAS 12 Income Taxes (IFRS) and ASC 740 Income Taxes (US GAAP), including the disclosure changes of FASB ASU 2023-09 (public business entities: annual periods beginning after 2024-12-15; other entities: annual periods beginning after 2025-12-15). Requirements are referenced by standard and paragraph number only: obtain the standards for the normative text. Replace every
[bracketed]value and every row marked Example. This is a document format, not tax, accounting, legal or financial advice.
Document control
| Field | Value |
|---|---|
| Document ID | [TAXPROV-FY2026] |
| Reporting group | [Group name] Example: Ostrander Group N.V., consolidated |
| Reporting date | [YYYY-MM-DD] Example: 2026-12-31 |
| Period type | [Annual / Interim (quarter or half-year)] |
| Accounting framework | [IFRS / US GAAP / both] Example: IFRS (IAS 12) |
| Presentation currency and units | [EUR million] |
| Reconciliation rate basis | [Parent statutory rate / weighted average of local rates] Example: Netherlands statutory rate 25.8% |
| Version | [0.1] |
| Status | [Draft / In review / Approved / Superseded] |
| Owner | [@head-of-tax-reporting] |
| Preparers | [@tax-analyst], [@entity-finance-leads] |
| Approvers/reviewers | [@head-of-tax], [@group-financial-controller], [@cfo], [external auditor for review] |
| Last updated | YYYY-MM-DD |
| Classification | [Confidential: finance and tax] |
| Related documents | [Pillar Two assessment], [Transfer pricing documentation], [Tax risk register] |
Approvals
| Role | Name | Decision | Date |
|---|---|---|---|
| Head of tax reporting (preparer sign-off) | [@name] | [Prepared] | YYYY-MM-DD |
| Head of tax (technical review) | [@name] | [Reviewed] | YYYY-MM-DD |
| Group financial controller (financial statement tie-out) | [@name] | [Reviewed] | YYYY-MM-DD |
| Chief Financial Officer | [@name] | [Approved] | YYYY-MM-DD |
Revision history
| Version | Date | Author | Change summary |
|---|---|---|---|
| 0.1 | YYYY-MM-DD | [@name] | Hard-close provision based on November actuals |
| 0.2 | YYYY-MM-DD | [@name] | Example: December actuals, Germany uncertain position and Netherlands FY2025 true-up |
| 1.0 | YYYY-MM-DD | [@name] | Approved; agreed with the auditor |
Contents
- 1. Scope, entities, rates and timetable
- 2. Provision process
- 3. Current tax computation
- 4. Temporary differences and deferred tax roll-forward
- 5. Deferred tax asset recoverability
- 6. Uncertain tax positions
- 7. Effective tax rate reconciliation
- 8. Pillar Two top-up tax
- 9. Interim period tax
- 10. Tax balances, journal entries and cash taxes
- 11. Disclosure checklist
- 12. Review, controls and sign-off
- 13. Glossary and references
- Standard and licence note
1. Scope, entities, rates and timetable
List every taxpaying entity and branch in the consolidation, the tax rate that applies to current tax for the period, and the rate expected to apply when temporary differences reverse. Under IFRS, use rates enacted or substantively enacted by the reporting date (IAS 12 paragraphs 46 and 47). Under US GAAP, use enacted rates only; the effect of a change is recognised in the period that includes the enactment date. Record the evidence for each rate (law reference, date of enactment) because the auditor tests it.
| Entity ID | Entity | Jurisdiction | Current tax rate FY2026 | Deferred tax rate | Rate evidence | Package owner |
|---|---|---|---|---|---|---|
| TX-001 (Example) | Ostrander Group N.V. (OST-NL) | Netherlands | 25.8% (headline rate) | 25.8% | Corporate income tax law, checked 2026-10 | [@nl-finance-lead] |
| TX-002 (Example) | Ostrander Deutschland GmbH (OST-DE) | Germany | 30.0% (corporate tax, solidarity surcharge and trade tax, blended) | 30.0% | Local adviser memo | [@de-finance-lead] |
| TX-003 (Example) | Ostrander UK Ltd (OST-UK) | United Kingdom | 25.0% | 25.0% | Main rate, checked 2026-10 | [@uk-finance-lead] |
| TX-004 (Example) | Ostrander Inc (OST-US) | United States | 25.0% (21% federal plus state, net of federal benefit) | 25.0% | Federal law and state apportionment | [@us-finance-lead] |
| TX-005 (Example) | Ostrander Vietnam Co., Ltd (OST-VN) | Vietnam | 10.0% (preferential rate for qualifying software production, Example; check the current incentive law) | 10.0% during incentive, 20.0% after | Incentive eligibility file and local adviser confirmation | [@vn-finance-lead] |
Rates as of 2026-10 for the fictional example; check local law at each reporting date. Where an entity has a preferential rate for a limited period, measure deferred tax at the rate expected when each difference reverses, which may be the standard rate.
1.1 Timetable
| Step | Activity | Owner | Due (working day relative to period end) |
|---|---|---|---|
| T1 | Rate and law change review signed off | [@head-of-tax] | WD -10 |
| T2 | Entity tax packages (current and deferred) submitted | Entity finance leads | WD +3 |
| T3 | Uncertain tax positions and recoverability memos updated | [@head-of-tax] | WD +4 |
| T4 | Group consolidation, ETR reconciliation and Pillar Two estimate | [@head-of-tax-reporting] | WD +5 |
| T5 | Review, journal posting and tie-out to the trial balance | [@group-financial-controller] | WD +6 |
| T6 | Disclosure note drafted and checked | [@group-reporting] | WD +8 |
Agree the timetable with the close calendar in the Month-End Close
Checklist (finance/month-end-close-checklist). Many groups run a
"hard close" provision on the eleventh month of actuals and then
true up for the final month, which keeps the tax team off the critical
path at year end.
2. Provision process
Each entity package starts from the entity's profit before tax under group accounting policies, not under local GAAP. Permanent differences (items never taxable or deductible) and temporary differences (timing differences between the carrying amount and the tax base of assets and liabilities) are listed with their source. The return-to-provision step compares last year's provision with the tax return actually filed and books the difference as a prior-year adjustment; analyse it every year, because a repeated pattern of under-provision points to a control weakness in the provision process.
3. Current tax computation
Current tax is the amount of income tax payable or recoverable for the period (IAS 12 paragraph 12; ASC 740-10). Compute it per entity, then add prior-year adjustments, uncertain tax position charges and any top-up tax. Show the full computation for the material entities in the workpaper; smaller entities can use a short form with the same lines.
3.1 Entity example: Ostrander Deutschland GmbH (TX-002)
| Line | Item | FY2026 (Example) |
|---|---|---|
| CT1 | Profit before tax under group IFRS policies | 6.300 |
| CT2 | Add: non-deductible expenses (permanent) | 0.200 |
| CT3 | Less: bonuses and provisions accrued in earlier years and paid or used this year, now deductible (temporary) | (0.200) |
| CT4 | Taxable profit (CT1 + CT2 + CT3) | 6.300 |
| CT5 | Current tax at 30.0% (CT4 x 30.0%) | 1.890 |
| CT6 | Uncertain tax position charge (section 6, UTP-001) | 0.250 |
| CT7 | Current tax expense (CT5 + CT6) | 2.140 |
| CT8 | Deferred tax charge on CT3 (0.200 x 30.0%) | 0.060 |
| CT9 | Total tax expense (CT7 + CT8) | 2.200 |
Example: The check is that total tax of 2.200 equals profit before tax at the local rate (6.300 x 30.0% = 1.890), plus the tax effect of the permanent item (0.200 x 30.0% = 0.060), plus the uncertain position (0.250): 1.890 + 0.060 + 0.250 = 2.200. The temporary difference moves tax between current and deferred but does not change the total. CT5 (1.890) is the German "income tax accrued" in CbC Table 1; the uncertain position in CT6 is excluded from that column.
3.2 Current tax by entity
| Entity | Profit before tax | Current tax before adjustments | Prior-year adjustment | Uncertain positions | Pillar Two top-up tax | Credits | Current tax expense |
|---|---|---|---|---|---|---|---|
| TX-001 Netherlands (Example) | 66.180 | 18.545 | (0.250) | 0.000 | 0.000 | 0.000 | 18.295 |
| TX-002 Germany (Example) | 6.300 | 1.890 | 0.000 | 0.250 | 0.000 | 0.000 | 2.140 |
| TX-003 United Kingdom (Example) | 4.500 | 1.125 | 0.000 | 0.000 | 0.000 | 0.000 | 1.125 |
| TX-004 United States (Example) | 3.630 | 1.001 | 0.000 | 0.000 | 0.000 | (0.100) | 0.901 |
| TX-005 Vietnam (Example) | 9.390 | 0.939 | 0.000 | 0.000 | 0.000 | 0.000 | 0.939 |
| Total | 90.000 | 23.500 | (0.250) | 0.250 | 0.000 | (0.100) | 23.400 |
Check: 66.180 + 6.300 + 4.500 + 3.630 + 9.390 = 90.000; 18.545 + 1.890
- 1.125 + 1.001 + 0.939 = 23.500; 23.500 - 0.250 + 0.250 - 0.100 = 23.400.
Example: The Netherlands figure is taxable profit of 71.880 (profit before tax 66.180, plus non-deductible items 7.700, less 2.000 of platform development costs deducted for tax faster than they are amortised in the accounts) at 25.8% = 18.545. The non-deductible items are share-based payment expense not deductible under the plan terms 3.200, an impairment of a minority shareholding covered by the participation exemption 2.900, and other items such as fines and the non-deductible part of mixed expenses 1.600 (Example; check the Dutch rules). The Netherlands prior-year adjustment of (0.250) is the return-to-provision true-up after the FY2025 return was filed. The United States figure is taxable profit of 4.004 (profit before tax 3.630, plus non-deductible items 0.310, plus 0.264 of accrued compensation not yet deductible, less 0.200 of loss carry-forward used) at 25.0% = 1.001, less a federal research credit of 0.100. Vietnam is 9.390 x 10.0% = 0.939.
The CbC "income tax accrued" column is current tax before adjustments less credits, per jurisdiction: 18.545, 1.890, 1.125, 0.901 and 0.939, total 23.400. The prior-year credit and the uncertain position charge are left out of CbC data; here they happen to offset, so consolidated current tax expense also equals 23.400. Reconcile the two figures every year, because they usually differ.
4. Temporary differences and deferred tax roll-forward
Deferred tax arises on temporary differences between the carrying amount of an asset or liability and its tax base (IAS 12 paragraphs 15 and 24; ASC 740-10). Build the schedule from the balance sheet: for each line with a difference, record the carrying amount, the tax base, the difference, the rate and the deferred tax. Then explain the movement between opening and closing balances.
4.1 Temporary differences at the reporting date
| TD ID | Balance sheet item | Entity | Carrying amount | Tax base | Temporary difference | Rate | Deferred tax asset (liability) |
|---|---|---|---|---|---|---|---|
| TD-001 (Example) | Capitalised platform development | TX-001 | 14.00 | 0.00 | 14.00 taxable | 25.8% | (3.612) |
| TD-002 (Example) | Accrued bonuses and provisions | TX-002 | (6.80) | 0.00 | 6.80 deductible | 30.0% | 2.040 |
| TD-003 (Example) | Property, plant and equipment (capital allowances ahead of depreciation) | TX-003 | 9.00 | 7.84 | 1.16 taxable | 25.0% | (0.290) |
| TD-004 (Example) | Unused tax losses carried forward, limited under IRC section 382 | TX-004 | Not applicable | 2.20 | 2.20 deductible | 25.0% | 0.550 |
| TD-005 (Example) | Accrued compensation deductible when paid | TX-004 | (0.764) | 0.00 | 0.764 deductible | 25.0% | 0.191 |
| Total | (1.121) |
4.2 Roll-forward
| Item | Opening 2026-01-01 | Profit or loss | OCI | Equity | Business combinations | FX | Closing 2026-12-31 |
|---|---|---|---|---|---|---|---|
| TD-001 (Example) | (3.096) | (0.516) | 0.000 | 0.000 | 0.000 | 0.000 | (3.612) |
| TD-002 (Example) | 2.100 | (0.060) | 0.000 | 0.000 | 0.000 | 0.000 | 2.040 |
| TD-003 (Example) | (0.250) | (0.040) | 0.000 | 0.000 | 0.000 | 0.000 | (0.290) |
| TD-004 (Example) | 0.600 | (0.050) | 0.000 | 0.000 | 0.000 | 0.000 | 0.550 |
| TD-005 (Example) | 0.125 | 0.066 | 0.000 | 0.000 | 0.000 | 0.000 | 0.191 |
| Net deferred tax | (0.521) | (0.600) | 0.000 | 0.000 | 0.000 | 0.000 | (1.121) |
Example: TD-001 grew from 12.00 to 14.00 (2.00 x 25.8% = 0.516 charge). TD-002 fell from 7.00 to 6.80 as provisions were used (0.20 x 30.0% = 0.060 charge). TD-003 grew from 1.00 to 1.16 (0.16 x 25.0% = 0.040 charge). TD-004: US losses of 2.40 at the start of the year are limited under IRC section 382 after a 2023 ownership change of OST-US (Example), with an annual limitation of 0.20, so 0.20 was used and 2.20 remain (0.20 x 25.0% = 0.050 charge). TD-005 grew from 0.50 to 0.764 (0.264 x 25.0% = 0.066 credit). The net movement is a charge of 0.600 to profit or loss (0.516 + 0.060 + 0.040 + 0.050 - 0.066), which is the deferred tax in CbC section 9.2 and in the master file. Total tax expense is current tax 23.400 plus deferred tax 0.600 = 24.000.
Present deferred tax assets and liabilities net only where there is a legally enforceable right of offset and they relate to the same taxation authority (IAS 12 paragraph 74). In this example the balances sit with four different authorities. The US items offset each other (0.550 + 0.191 = 0.741 asset), so the statement of financial position shows deferred tax liabilities of 3.902 (Netherlands 3.612, UK 0.290) and deferred tax assets of 2.781 (Germany 2.040, US 0.741), not the net figure of 1.121.
5. Deferred tax asset recoverability
Under IFRS a deferred tax asset is recognised to the extent that it is probable that taxable profit will be available (IAS 12 paragraphs 24, 34 to 36). Where an entity has a history of recent losses, convincing other evidence is needed (paragraph 35), and if it made a loss in the current or preceding period in the jurisdiction, the amount of the asset and the nature of the evidence are disclosed (paragraph 82). Under US GAAP all deferred tax assets are recognised and reduced by a valuation allowance if it is more likely than not that some part will not be realised. Weigh positive and negative evidence objectively and document the weighting.
| DTA ID | Entity | Gross DTA | Sources of taxable profit | Negative evidence | Positive evidence | Conclusion | Recognised |
|---|---|---|---|---|---|---|---|
| DTA-001 (Example) | TX-004 United States (TD-004, TD-005) | 0.741 | Forecast taxable profit FY2027 to FY2037; section 382 limitation of 0.20 a year | Losses in FY2022 and FY2023; annual limitation spreads use over 11 years | Profits in FY2024 to FY2026, limited-risk distributor margin policy, signed customer contracts to 2028 | Probable | 0.741 |
| DTA-002 (Example) | TX-002 Germany | 2.040 | Reversal against current profits | None | Stable profit history | Probable | 2.040 |
| DTA-003 (Example) | TX-003 United Kingdom capital losses | 0.400 | Capital gains only | No capital gains planned | None | Not probable | 0.000 |
Example: The US losses arose in FY2022 and FY2023. OST-US has been
profitable since FY2024 and earns a routine distributor margin under
transfer pricing policy TPP-001, so taxable profit of at least 0.20 a
year is probable and the whole asset is recognised. Check the period
over which the losses can be used: federal losses arising after 2017
carry forward indefinitely (check), so the section 382 limit delays
use but does not cause expiry. Because OST-US made no loss in FY2025 or
FY2026, the paragraph 82 disclosure does not apply this year. Use the
same forecast that supports the impairment test and the Going Concern
Assessment (finance/going-concern-assessment), adjusted for tax.
6. Uncertain tax positions
IFRIC 23 Uncertainty over Income Tax Treatments sets the IFRS approach: assume the authority will examine the position with full knowledge, decide whether it is probable that the treatment will be accepted, and if not, measure using the most likely amount or the expected value, whichever better predicts the outcome. US GAAP uses a two-step approach in ASC 740-10: recognise a benefit only if the position is more likely than not to be sustained on its technical merits (ASC 740-10-25-6), and measure it at the largest amount that is more than 50% likely to be realised on settlement. Interest and penalties follow the group policy (within income tax or within other expenses), applied consistently.
| UTP ID | Entity and year | Issue | Exposure (tax) | Probability view | Method | Provision | Interest and penalties | Next review |
|---|---|---|---|---|---|---|---|---|
| UTP-001 (Example) | TX-002 Germany, FY2023 to FY2026 | Deductibility of the group support service charge from OST-NL (SVC-002, TPP-003) | 0.60 | Not probable that full deduction is accepted | Expected value | 0.25 (current year increase) | 0.03, in finance costs per group policy | 2027-03-31 |
| UTP-002 (Example) | TX-005 Vietnam, FY2025 | Eligibility of the hardware resale income for the preferential rate | 0.12 | Probable that treatment is accepted | Not applicable | 0.00 | 0.00 | 2027-06-30 |
Example: UTP-001 relates to the group support service charge
(SVC-002, TPP-003 in the Transfer Pricing Master File,
finance/transfer-pricing-master-file), documented in the German local
file TP-LF-DE-FY2026 prepared with Transfer Pricing Local File
(finance/transfer-pricing-local-file). The total provision for the
position at 2026-12-31 is 0.55, of which 0.25 is charged in FY2026.
Keep the technical memo and adviser opinions in the evidence index;
disclose the judgement if it is significant.
Uncertain tax positions are not covered taxes for Pillar Two until paid, so tag them separately in the provision tool so that the GloBE computation can exclude them.
7. Effective tax rate reconciliation
IFRS requires an explanation of the relationship between tax expense and accounting profit, either as a numerical reconciliation of tax amounts, of rates, or both, using the parent's domestic rate or an aggregate of local rates (IAS 12 paragraph 81(c)). US GAAP public business entities applying ASU 2023-09 must present a tabular reconciliation in both amounts and percentages, starting from the federal (national) statutory rate of the country of domicile, with specified categories shown separately and further disaggregation of items at or above 5% of the expected tax.
7.1 Reconciliation (IFRS, parent rate)
| Line | Reconciling item | EUR m | % of profit before tax |
|---|---|---|---|
| R1 | Profit before tax | 90.000 | |
| R2 | Tax at Netherlands statutory rate 25.8% | 23.220 | 25.80% |
| R3 | Effect of different tax rates in other jurisdictions | (1.284) | (1.43%) |
| R4 | Non-deductible expenses | 2.164 | 2.40% |
| R5 | Tax credits (US research credit) | (0.100) | (0.11%) |
| R6 | Pillar Two top-up tax | 0.000 | 0.00% |
| R7 | Changes in unrecognised deferred tax assets | 0.000 | 0.00% |
| R8 | Adjustments in respect of prior years (Netherlands) | (0.250) | (0.28%) |
| R9 | Uncertain tax positions (Germany) | 0.250 | 0.28% |
| R10 | Total tax expense and effective tax rate | 24.000 | 26.67% |
Example: The rate effect in R3 is the sum of each jurisdiction's profit times its rate difference from 25.8%: Germany 6.300 x 4.2% = 0.265; UK 4.500 x (0.8%) = (0.036); US 3.630 x (0.8%) = (0.029); Vietnam 9.390 x (15.8%) = (1.484). Total (1.284), most of it the Vietnamese preferential rate. Non-deductible expenses R4 combine the Netherlands 1.987 (7.700 x 25.8%), Germany 0.060 (section 3.1), the UK 0.040 (0.160 x 25.0%) and the US 0.078 (0.310 x 25.0%): 2.164 after rounding. Total: 23.220 - 1.284 + 2.164 - 0.100 - 0.250 + 0.250 = 24.000, and the effective tax rate is 24.000 / 90.000 = 26.67%; the percentages in the last column do not add exactly because of rounding. R6 stays in the table at zero because Vietnam passes the Pillar Two safe harbour only narrowly (section 8); R7 is zero because no previously unrecognised losses were recognised or derecognised (the UK capital losses in DTA-003 remain unrecognised).
7.2 Mapping to ASU 2023-09 categories (US GAAP reporters)
| ASU 2023-09 category | Ostrander line (if it reported under US GAAP) | Disaggregation needed at 5% threshold? |
|---|---|---|
| State and local income tax, net of federal effect (subnational taxes of the country of domicile) | None for a Dutch domicile; US state tax sits within foreign tax effects (R3) | Show as its own category when applicable |
| Foreign tax effects | R3 (non-domestic jurisdictions, including US federal and state tax), R6 | By jurisdiction and nature where at or above threshold |
| Effect of changes in tax laws or rates enacted in the current period | None in FY2026 | Category shown when applicable |
| Effect of cross-border tax laws | R6 could fall here or in foreign tax effects, per policy | By nature where at or above threshold |
| Tax credits | R5 | By nature where at or above threshold |
| Changes in valuation allowances | R7 | Category shown |
| Nontaxable or nondeductible items | R4 | By nature where at or above threshold |
| Changes in unrecognised tax benefits | R9 | Category shown |
| Other items at or above threshold | R8 if at or above threshold | Separately by nature |
Example: If Ostrander reported under US GAAP with a Dutch domicile, the 5% threshold would be 5% x (90.000 x 25.8%) = 1.161. Vietnam's rate effect of (1.484) is above it, so Vietnam would be shown as a separate foreign jurisdiction; the Netherlands non-deductible items of 1.987 are also above it and would be disaggregated by nature (share-based payments 0.826, participation impairment 0.748, other 0.413). Germany's rate effect of 0.265 is well below the threshold. This mapping is illustrative: obtain ASU 2023-09 and ASC 740-10-50 for the full requirements, including the disaggregated income taxes paid disclosure.
8. Pillar Two top-up tax
The Pillar Two estimate comes from the Pillar Two GloBE Readiness
Assessment (finance/pillar-two-globe-readiness). Under IFRS, apply
the mandatory exception from deferred tax accounting for Pillar Two
income taxes in IAS 12 paragraph 4A and give the disclosures in
paragraphs 88A to 88D, including current tax related to Pillar Two
shown separately. Under US GAAP, top-up taxes are generally treated as
a period cost in ASC 740; agree the policy with the auditor.
| P2 ID | Jurisdiction | Basis | GloBE income | Covered taxes | ETR | SBIE | Excess profit | Top-up tax |
|---|---|---|---|---|---|---|---|---|
| P2-001 (Example) | Vietnam | Transitional CbCR safe harbour, routine profits test (simplified ETR 10.0% fails 17%) | CbC profit before tax 9.390 | 0.939 | 10.0% | 9.454 | None: profit before tax below SBIE by 0.064 | 0.000 |
| P2-002 (Example) | Netherlands, Germany, UK, US | Transitional CbCR safe harbour, simplified ETR test (17%) | Not computed | 18.811, 1.950, 1.165, 0.885 | 28.42%, 30.95%, 25.89%, 24.38% | Not computed | Not computed | 0.000 |
Example: For FY2026 the transition rates for the substance-based income exclusion are 9.4% for eligible payroll and 7.4% for eligible tangible assets. Vietnam's eligible payroll is 86.400 and eligible tangible assets 18.000: SBIE = 86.400 x 9.4% + 18.000 x 7.4% = 8.122 + 1.332 = 9.454 (rounded), above CbC profit before tax of 9.390, so the top-up tax is deemed zero and no Pillar Two current tax is recognised. The margin of 0.064 is thin: as a shadow figure, if the safe harbour were lost and net GloBE income were 9.790 (CbC profit plus 0.400 of GloBE adjustments, as in the FY2025 shadow computation), the ETR would be 0.939 / 9.790 = 9.6%, the top-up percentage 15.0% - 9.6% = 5.4%, and the Vietnamese QDMTT about 5.4% x (9.790 - 9.454) = 0.018. Disclose the exception statement under IAS 12 paragraph 88A and state that current tax related to Pillar Two is nil (paragraph 88B). The lowest simplified ETR among the other jurisdictions is the US at 24.38% ((0.901 - 0.016) / 3.630), comfortably above 17%.
9. Interim period tax
For interim reports, tax expense is generally recognised using the best estimate of the weighted average annual income tax rate expected for the full year, applied to the interim period's pre-tax income (IAS 34 paragraphs B12 to B16; ASC 740-270 under US GAAP). Estimate the rate per jurisdiction where rates differ materially. Record one-off items (prior-year adjustments, changes in uncertain positions, enacted rate changes, recognition of previously unrecognised losses) as discrete items in the period they occur rather than spreading them through the estimated annual rate.
| Quarter | Year-to-date profit before tax | Estimated annual ETR (excluding discrete items) | Tax on ordinary income | Discrete items | Year-to-date tax expense |
|---|---|---|---|---|---|
| Q1 FY2026 (Example) | 20.00 | 26.67% | 5.334 | 0.000 | 5.334 |
| Q2 FY2026 (Example) | 42.00 | 26.67% | 11.201 | (0.250) (Netherlands prior year) | 10.951 |
| Q3 FY2026 (Example) | 66.00 | 26.67% | 17.602 | 0.000 net: (0.250) Netherlands prior year, 0.250 Germany uncertain position | 17.602 |
Example: The estimated annual ETR excluding discrete items is 24.000 / 90.000 = 26.67%, because the two discrete items offset over the year. 20.00 x 26.67% = 5.334; 42.00 x 26.67% = 11.201 (rounded); 66.00 x 26.67% = 17.602 (rounded); 11.201 - 0.250 = 10.951. The Netherlands true-up is booked in Q2, when the FY2025 return is filed, and the German uncertain position in Q3, when the audit findings arrive. The estimated annual rate is reassessed each quarter; at year end the actual computation in sections 3 to 8 replaces it.
10. Tax balances, journal entries and cash taxes
10.1 Current tax payable roll-forward
| Entity | Opening payable (receivable) | Current tax expense | Cash paid | Refunds received | FX and other | Closing payable (receivable) |
|---|---|---|---|---|---|---|
| Group total (Example) | 4.200 | 23.400 | (21.560) | 0.000 | 0.000 | 6.040 |
Example: 4.200 + 23.400 - 21.560 + 0.000 = 6.040. Cash paid of 21.560 is the "income tax paid" total in CbC Table 1. Refunds, when they occur, increase the payable because they reverse an earlier payment. Uncertain tax position provisions can be presented within current tax liabilities; state where they sit in the tie-out.
10.2 Journal entries
| JE ID | Description | Debit | Credit | Amount |
|---|---|---|---|---|
| TJE-001 (Example) | Record current tax for FY2026 | Income tax expense (current) | Current tax payable | 23.400 |
| TJE-002 (Example) | Record deferred tax movement on liabilities | Income tax expense (deferred) | Deferred tax liabilities | 0.556 |
| TJE-003 (Example) | Record deferred tax movement on assets | Income tax expense (deferred) | Deferred tax assets | 0.044 |
Example: TJE-002 combines TD-001 (0.516) and TD-003 (0.040); TJE-003 nets TD-002 (0.060), TD-004 (0.050) and TD-005 ((0.066)): 0.060 + 0.050
- 0.066 = 0.044. The net deferred effect is a charge to expense of
0.556 + 0.044 = 0.600.
Support each entry with the schedules in sections 3 and 4, as described
in Journal Entry Support (
finance/journal-entry-support).
10.3 Cash taxes
Report income taxes paid net of refunds in the cash flow statement. Under ASU 2023-09, US GAAP reporters also disaggregate taxes paid by federal, state and foreign, and show any single jurisdiction at or above 5% of total income taxes paid. Keep a payments log per authority with dates and references so the disclosure and the reconciliation in 10.1 come from the same source.
11. Disclosure checklist
| Disc ID | Requirement (by reference) | Framework | Disclosed where | Status |
|---|---|---|---|---|
| DSC-001 (Example) | Major components of tax expense (current, deferred, prior-year) | IAS 12 paragraph 79 and 80 | Note [x], table 1 | Done |
| DSC-002 (Example) | Tax relating to items in OCI and equity | IAS 12 paragraph 81(a), (ab) | Note [x] | Not applicable |
| DSC-003 (Example) | Explanation of relationship between tax expense and accounting profit | IAS 12 paragraph 81(c) | Note [x], table 2 | Done |
| DSC-004 (Example) | Changes in applicable tax rates | IAS 12 paragraph 81(d) | Note [x] | None in period |
| DSC-005 (Example) | Unrecognised deductible differences, losses and credits | IAS 12 paragraph 81(e) | Note [x] | Done (UK capital losses) |
| DSC-006 (Example) | Deferred tax by type of temporary difference and losses | IAS 12 paragraph 81(g) | Note [x], table 3 | Done |
| DSC-007 (Example) | Amount of a DTA and supporting evidence where utilisation depends on future profits and the entity made a loss in the current or preceding period | IAS 12 paragraph 82 | Note [x] | Not applicable (no US loss in FY2025 or FY2026) |
| DSC-008 (Example) | Pillar Two exception statement and current tax amount | IAS 12 paragraphs 88A to 88D | Note [x] | Done |
| DSC-009 (Example) | Judgements and estimation uncertainty on uncertain positions | IFRIC 23 and IAS 1 (IAS 8 and IFRS 18 from 2027-01-01) | Note [critical judgements] | Done |
| DSC-010 (Example) | Rate reconciliation categories and taxes paid disaggregation | ASU 2023-09, ASC 740-10-50 (US GAAP only) | Not applicable for an IFRS reporter | Not applicable |
From annual periods beginning on or after 2027-01-01, IFRS 18 replaces
IAS 1 and changes the presentation of the income statement; income tax
remains a separate line, but check the new totals and subtotals with
the IFRS 18 Transition Plan (finance/ifrs-18-transition-plan).
12. Review, controls and sign-off
| Control ID | Control | Frequency | Owner | Evidence |
|---|---|---|---|---|
| TPC-001 (Example) | Rate and law change review against official sources | Each reporting date | [@head-of-tax] | Signed rate table |
| TPC-002 (Example) | Entity package review with tie-out to the trial balance | Each reporting date | [@head-of-tax-reporting] | Review checklist |
| TPC-003 (Example) | Return-to-provision analysis and true-up | Annual, after filing | [@tax-analyst] | True-up schedule |
| TPC-004 (Example) | DTA recoverability and UTP memo review | Each reporting date | [@head-of-tax] | Approved memos |
| TPC-005 (Example) | ETR reconciliation reasonableness review (variance to prior year and forecast above 1 point explained) | Each reporting date | [@group-financial-controller] | Variance commentary |
| TPC-006 (Example) | Disclosure checklist completion | Annual | [@group-reporting] | Completed section 11 |
Treat the provision as a key area in the internal control framework:
the tax line is a frequent source of restatements and audit findings.
Keep a clear audit trail from each figure in the note to its schedule,
and from each schedule to the ledger or an approved memo. Give the
auditor the evidence pack listed in the PBC Request List
(finance/pbc-request-list) at the agreed date, and record significant
judgements in the Management Representation Letter
(finance/management-representation-letter) where the auditor asks for
them.
12.1 Sign-off
| Role | Name | Statement | Date |
|---|---|---|---|
| Preparer | [@name] | Computations complete and tie to the ledger | YYYY-MM-DD |
| Reviewer | [@name] | Judgements reviewed; ETR movement explained | YYYY-MM-DD |
| Approver | [@name] | Provision and note approved for the financial statements | YYYY-MM-DD |
13. Glossary and references
13.1 Glossary
| Term | Meaning in this template |
|---|---|
| Current tax | Income tax payable or recoverable on taxable profit for the period |
| Deferred tax | Tax payable or recoverable in future periods on temporary differences, losses and credits |
| Discrete item | An item recognised in the interim period in which it occurs, not through the estimated annual rate |
| ETR | Effective tax rate: total tax expense divided by profit before tax |
| Permanent difference | Income or expense that is never taxable or deductible |
| Return-to-provision | Comparison of the prior-year provision with the filed return |
| Substantively enacted | A rate or law whose remaining legislative steps will not change the outcome (IFRS concept) |
| Temporary difference | Difference between the carrying amount of an asset or liability and its tax base |
| Uncertain tax position | A tax treatment the authority may not accept |
| Valuation allowance | US GAAP reduction of a deferred tax asset to the amount more likely than not to be realised |
13.2 References
| Reference | Version or date checked | Use |
|---|---|---|
| IAS 12 Income Taxes, including International Tax Reform: Pillar Two Model Rules amendments (May 2023) | Paragraph numbers only, checked 2026-10-25 | Recognition, measurement and disclosure references |
| IFRIC 23 Uncertainty over Income Tax Treatments | Name only | Section 6 |
| IAS 34 Interim Financial Reporting | Paragraphs B12 to B16, numbers only | Section 9 |
| IFRS 18 Presentation and Disclosure in Financial Statements | Effective for annual periods beginning on or after 2027-01-01 | Section 11 |
| FASB ASC 740 Income Taxes (subtopics 740-10 and 740-270) | Topic and paragraph numbers only | US GAAP notes |
| FASB ASU 2023-09 Income Taxes (Topic 740): Improvements to Income Tax Disclosures | Issued 2023-12-14; PBEs from annual periods beginning after 2024-12-15; others after 2025-12-15 | Section 7.2 and 10.3 |
| OECD Pillar Two Side-by-Side Package (CC BY 4.0) | 2026-01-05 | Transition rates for the safe harbour test in section 8 |
Standard and licence note
Structure aligned with IAS 12 Income Taxes, IFRIC 23, IAS 34 and FASB ASC Topic 740 as amended by ASU 2023-09; these standards are cited by name and paragraph or topic number only, and no text, example or table from IFRS Foundation or FASB material is reproduced or paraphrased. Pillar Two references follow the OECD Side-by-Side Package (OECD, 2026, CC BY 4.0); this adaptation does not represent the official views of the OECD or of its Member countries. IFRS is a trade mark of the IFRS Foundation; this template is not affiliated with or endorsed by it or by the FASB. Ostrander Group N.V. and every figure are fictional. This template is original text written for this collection. Check the current official versions of the standards and each tax law before use. Template licence: MIT.
関連テンプレート
Tax Strategy Statement Template (UK Finance Act 2016 Schedule 19)
Published tax strategy: applicability tests, statutory paragraph, risk governance, tax planning attitude, risk appetite, HMRC dealings, publication record
財務・投資・会計13-Week Cash Flow Forecast Template (Direct Method)
Direct-method weekly cash forecast: opening cash and facilities, receipts and disbursements by category, weekly roll, headroom vs minimum, variance and bridge, levers
財務・投資・会計Balance Sheet Account Reconciliation Template
GL versus independent source, reconciling items with type, age and owner, unexplained difference threshold, roll-forward, evidence index, preparer and reviewer sign-off