IFRS Issuers With Operations In The US: Have You Revised Your Estimates?

Tax changes in the US are felt in many places around the world, and the recent tax update across the pond, passed in late 2017, is no exception. In Luxembourg, companies with operations in the US (e.g. a US subsidiary) may be significantly affected. Because IFRS requires issuers to prepare their financial information based on substantively enacted tax laws and rates, companies already need to analyse the effect of the new US tax law while preparing their December 2017 financial statements.

What are the main changes?

A decrease in corporate tax rate, from 35% to 21%, as of 1 January 2018 This means that companies must re-evaluate a number of existing deferred tax assets and liabilities using this new rate. The new rate will imply a corresponding change in deferred tax expense due to a write-down of deferred tax assets or a reduction of deferred tax liabilities, as has already been announced by several multi-national banks and companies.

Repatriation deemed mandatory in certain cases, tax thereon not deferrable Under US tax law, a company's foreign earnings accumulated under legacy tax laws are deemed to be repatriated. The tax on such earnings cannot be deferred indefinitely anymore, but they may be paid...