International Tax Reform – Pillar Two Model Rules


The International Accounting Standards Board (IASB) has recently issued an exposure draft: International Tax Reform—Pillar Two Model Rules (the ED) which proposes amends to IAS 12 Income Taxes (IAS 12).

In December 2021, the Organisation for Economic Co-operation and Development (OECD) published its Pillar Two model rules that:

  1. aim to ensure that large multinational groups pay a minimum amount of tax on income arising in each jurisdiction in which they operate; and
  2. would achieve that aim by applying a system of top-up taxes that results in the total amount of taxes payable on excess profit in each jurisdiction representing at least the minimum rate of 15%.

Proposed amendments

In response to the stakeholders concerns about the uncertainty over the accounting for deferred taxes arising from jurisdictions implementing the Pillar Two model rules, the IASB proposes to introduce:

  1. a temporary mandatory exception to the accounting for deferred taxes arising from the implementation of the Pillar Two model rules; and
  2. targeted disclosure requirements for affected companies.

The IASB expects the proposed amendments to provide timely relief for affected entities and avoid inconsistent interpretations of IAS 12 developing in practice.

Your feedback is important

We encourage you to read the ED and to share your comments with us.

The XRB is committed to adopting international accounting standards in the for-profit sector. Generally, once a standard has been issued by the IASB, the XRB then issues the New Zealand equivalent standard without further public consultation.

It is important that we receive comments from preparers, readers of for-profit financial statements and other stakeholders at this time. This will help the XRB when representing New Zealand’s views to the IASB during the development of this international standard.

The XRB will consider separately any proposed disclosure concessions for Tier 2 for-profit entities.

Your comments will help us ensure that the standard provides for appropriate reporting outcomes for reporting entities in Aotearoa New Zealand.

Accessing the Consultation Document

Commenting on the Proposals

This is your opportunity to comment on the proposals.

Please send your comments—both formal and informal—to the XRB by 15 February 2023 , using the secure upload form below.

All comments received will be considered by the New Zealand Accounting Standards Board (NZASB) of the XRB and will form part of the feedback we share with the IASB.

You could also choose to send your comments directly to the IASB (due by 10 March 2023), by clicking on the following link When submitting directly, we encourage you to also send a copy of your submission to the XRB (through the upload form below).

We intend on publishing all comments on the XRB website, unless they may be defamatory. If you have any objection to this, we will not publish them. However, they will remain subject to the Official Information Act 1982 and, therefore, may be released in part or in full. The Privacy Act 2020 also applies.