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In August 2014, EFRAG published a Short Discussion Series paper 'Levies: What would have to be changed in IFRS for a different accounting outcome'. The paper illustrated alternative approaches that would affect the accounting outcome some constituents are concerned about.
Responses to the paper showed that, in general, respondents are concerned with the application of IFRIC 21 since they believe that, especially in interim periods, entities’ performance will be distorted as the cost of certain levies charged on a periodic basis will be recognised at a point in time.
In general, respondents believed that it will be difficult to identify assets or services in exchange for the payment of levies. Respondents noted that such assessment required a case-by-case analysis. Nevertheless, they did not indicate additional characteristics of levies that might be assessed for analysing whether assets or services were received in exchange for its payment beyond those proposed in the paper.
Overall, respondents agreed that there might be elements in the law to designate the obligating event other than the due date specified in the law. In particular, some respondents considered that the characteristic described in paragraph 67 of the paper (levy proportionately reduced based on the number of days in which the entity was in business during a period) was a good indicator that the levy should be recognised over a period.
Respondents would support the IASB developing a research project dealing with all transactions with government authorities. However, in general, respondents believed that other alternatives would provide a better solution. Specifically, respondents preferred the inclusion of a specific requirement in IAS 34 Interim Financial Reporting as the most effective in terms of practicality, ease and speed of implementation. One respondent that favoured developing specific requirements in IAS 34 noted that they would not support a full revision of the principles in IAS 37 for the sole purpose of solving a specific issue relating to levies. A minority was not however in favour of short term solutions and pointed to IAS 12 Income Taxes principles as a better solution.