ESBG Position Paper on IAS Application

30 April 2003

The European Savings Banks Group (ESBG) issued a Position Paper on the application of IAS concentrating on the implications of a common consolidated tax base. The Group regards this issue as the most sensitive as it would require unanimity between Member States. Therefore, it is unlikely that Member States would welcome the loss of control over their own tax base. The ESBG thinks that the basic principle of an EU wide consolidated tax base should be decided upon before any real in-depth consideration can be given to the relevance of the IAS.

As regards the use of IAS as a common basis for reporting, the ESBG believes that the establishment of a common reporting base introduces many difficulties to be overcome before any proposal to establish a common tax base could actually materialise. The differing objectives of tax reporting, financial reporting (accounting) or statistical reporting may not be met.

According to the Regulation on the application of IAS, it will be compulsory for listed consolidated entities to use IAS from 2005. IAS could introduce significant additional volatility into both the profit and loss account and balance sheet, particularly in the case of financial institutions through the use of IAS 39. The tax authorities therefore could be reluctant to use the IAS as the tax basis because of their subsequent impact on tax revenues.

The ESBG considers it premature therefore to think about the establishment of a common tax base derived from IAS given that the experiences with IAS are still rather limited.

ESBG position paper

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