E.13 Reconciliation of Actual and Expected Tax Rate
Under U.S. GAAP, all public entities must disclose in percentages or dollars a
reconciliation between (1) the reported amount of income tax expense attributable to
continuing operations and (2) the amount of income tax expense that would have
resulted from applying domestic federal statutory rates to pretax income from
continuing operations. In addition, they should disclose the amount and nature of
each significant reconciling item. For nonpublic entities, a numerical
reconciliation is not required; however, the nature of all significant reconciling
items related to (1) and (2) above should be disclosed. See Section 14.3.1 for additional guidance.
Under IFRS Accounting Standards, paragraph 81(c) of IAS 12 states
that all entities must disclose a numerical reconciliation in either or both of the
following forms:
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The reported “tax expense (income) and the product of accounting profit multiplied by the applicable tax rate(s), disclosing also the basis on which [any] applicable tax [rate is] computed.”
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The “average effective tax rate and the applicable tax rate, disclosing also the basis on which the applicable tax rate is computed.”