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The IFRS Interpretations Committee received a request to clarify what the obligating event is that gives rise to the recognition of a liability for levies and was informed that there was diversity in practice in the timing of recognition of the liability to pay a levy.
In May 2013, the IASB issued IFRIC Interpretation 21 Levies, an Interpretation on the accounting for levies imposed by governments. The Interpretation clarifies that the obligating event that gives rise to a liability is the activity that triggers the payment of the levy, as identified by legislation.
EFRAG has issued its Endorsement Advice and Effects Study Report relating to the Interpretation for use in the European Union and European Economic Area. EFRAG supports the adoption of IFRIC Interpretation 21 Levies and recommends its endorsement.
EFRAG’s recommendation is explained in the letter to the European Commission, and the accompanying Basis for Conclusions and the Effects Study Report on the costs and benefits of implementing the Interpretation.
Final endorsement advice and effects study