The Effect of Ifrs on Tax Planning

Essay 2: The Effect of IFRS on Current Tax Planning

Xxxx Xxxxxx

ACCT 612

Xxxxxx University

21 September XXXX

Abstract

The purpose of this paper is to describe what are the international financial reporting standards (IFRS), how they came to be, what influence they already have in the international stage, how the United States is converging its use alongside their existing generally accepted accounting principles (GAAP), but most importantly, what tax reporting implications, the adoption of the IFRS in the United States would have. The paper will rely on past and current government and private industry analysis and research and will also identify steps already taken to converge GAAP with IFRS in order to find more commonalty of financial reporting with the increasing international landscape converging and adopting IFRS. This paper will show that studies conducted on the adoption of the IFRS by the United States versus only converging, do not show much benefit and has lawmakers and private industry alike, reluctant to fully adopt IFRS in the United States.

Keywords: IFRS, GAAP, tax law, international, IASB, IASC

The Effect of IFRS on Current Tax Planning

What is IFRS?

In 1973, through international efforts to develop a unified set of high-quality, international accounting standards that would be used in at least all major capital markets, the International Accounting Standards Committee (IASC) was formed. In 2001, the IASC became the International Accounting Standards Board (IASB), an independent international standard setter. As of 2013, the European Union and more than 100 other countries either require or permit the use of international financial reporting standards (IFRS) issued by the IASB or a local variant of them (Financial Accounting Standards Board, n.d.).

IFRS are a set of principles and rules for reporting various transactions and items in the financial statements. Presently, companies in the United States utilize the Generally Accepted...