|
|
A public authority may impose a levy on entities that operate in a specific market. Examples of public authorities include national governments, regional governments (for example, state, provincial, territorial), local governments (for example, city, town) and their component entities (for example, departments, agencies, boards, commissions).
The Interpretations Committee was asked to consider how an entity would account for the payment of levies, other than income taxes, in its financial statements; specifically, when the liability to pay a levy should be recognised. The proposed guidance clarifies that the obligating event that gives rise to a liability to pay a levy is the activity that triggers the payment of the levy as identified by the legislation.
The IFRS Interpretations Committee has received requests for guidance on the accounting for levies in the financial statements of the entity paying the levy. The questions relate to when the liability to pay a levy should be recognised and to the definition of a present obligation in IAS 37 'Provisions, Contingent Liabilities and Contingent Assets'.