Webinar: NIC 12 Impuesto a las Ganancias

Summary

The webinar explains how IAS 12, Income Taxes requires a company to report both the tax currently payable and the future tax consequences of differences between its financial statements and tax calculations. The examples use Peruvian tax rules and refer to SUNAT, Peru’s tax authority.

1. Income tax expense has two components

The income-tax line in the income statement combines:

• Current tax: The amount determined under tax law and payable to the tax authority. The presenter describes it as an expense.
• Deferred tax: The future tax effect of differences between the accounting and tax bases of assets and liabilities. Depending on those differences, deferred tax can be an expense or income.

As a result, two companies can report different current-tax amounts yet both have correctly calculated net profit: their deferred-tax effects may differ.

2. Tax adjustments are not the same as temporary differences

The presenter distinguishes between:

• Tax-return additions and deductions: Adjustments made to accounting profit when calculating taxable profit. They may be temporary or permanent under tax rules.
• Temporary differences for deferred tax: Differences between the accounting carrying amount and tax base of an asset or liability.

The two concepts are related, but they are not interchangeable. Deferred tax is determined using the balance-sheet (liability) method, comparing accounting and tax bases. The older income-statement method—based on the net of temporary tax-return adjustments—is described as no longer valid.

3. How to determine deferred tax

The method outlined in the webinar is:

1. Identify the asset or liability and its accounting carrying amount.
2. Determine its tax base under tax rules.
3. Compare the two amounts to identify a temporary difference.
4. Classify the difference:
   • A taxable temporary difference gives rise to a deferred tax liability.
   • A deductible temporary difference gives rise to a deferred tax asset.
5. Measure the deferred tax using the tax rate expected to apply when the asset is recovered or the liability settled—not automatically the rate in force today.
6. Where tax rates are graduated, analyze which rate applies to the particular item rather than simply using an average.

The presenter cautions that the sign of a difference depends on whether the item is an asset or liability. In his worksheet convention, liabilities are shown as negative amounts, so the sign should be interpreted consistently with that convention.

4. Practical examples

• Inventory and net realizable value (IAS 2): Inventory is measured at the lower of cost and net realizable value. Net realizable value is calculated as selling price less costs to complete and sell. If an accounting write-down is not accepted for tax purposes at that time, the accounting carrying amount is below the tax base, producing a deductible temporary difference and a deferred tax asset. The write-down is treated as a temporary tax adjustment in the exercise.
• Revalued vehicles (IAS 16): The exercise records depreciation and then revalues vehicles using the proportional-allocation approach. The presenter explains that SUNAT does not generally accept a voluntary revaluation for tax purposes, so the accounting value rises while the tax base does not. This creates a taxable temporary difference and a deferred tax liability. The exercise also notes that depreciation is tax-deductible only within applicable tax limits.
• Lawsuit provisions (IAS 37): A probable obligation is recognized as a provision and expense; a possible obligation is disclosed; a remote obligation requires no action. If the provision is not yet deductible for tax purposes, it creates a deductible temporary difference and a deferred tax asset.
• Unpaid vacation pay: The accounting liability is recognized, but the exercise treats the unpaid amount as not yet deductible for tax. This difference produces a deferred tax asset. The tax reconciliation also distinguishes unpaid current-year accruals from amounts accrued in an earlier year and paid in the current year.

5. Deferred-tax balances and accounting entries

The balance reported at year-end is the deferred-tax asset or liability required by the current calculation. The accounting entry must adjust the prior-year balance to that ending amount; it is not necessarily equal to the current year’s temporary difference alone.

The webinar walks through six basic movements: an asset or liability may increase or decrease, or change from an asset to a liability or vice versa. Each movement requires removing or adjusting the prior balance and recognizing the new ending balance. The net effect runs through deferred-tax expense or income, which can go either way.

Deferred tax assets and liabilities may be offset, as discussed in the session, when they relate to the same tax authority. The presenter contrasts companies subject to the same authority in Peru with balances arising in different countries, which should not be offset in the example.

6. Calculating current tax and the final income-statement amount

To calculate current tax, the exercise starts with accounting profit before tax and applies tax additions and deductions. These include, among other items, the inventory write-down and lawsuit provision treated as temporary additions, along with the vacation-pay adjustments. Applying the relevant tax rate gives current tax payable.

The income statement then combines current tax with deferred-tax expense or income. Consequently, the reported income-tax amount can differ from current tax payable alone.

Speakers and sources featured

• Mario Alfaro Luperdi — Main presenter and instructor.
• Audience participants — Several attendees respond and ask questions; names discernible in the subtitles include José, Giovani/Giov, Clinton C., Luis, Yilma, Miri, and Mar.
• Standards discussed: IAS 12 (Income Taxes), IAS 2 (Inventories), IAS 16 (Property, Plant and Equipment), and IAS 37 (Provisions, Contingent Liabilities and Contingent Assets).
• Other sources mentioned: SUNAT and Peruvian tax rules; accounting authors Jorge de Velasco, Carlos Valle, and Fredy (surname unclear in the subtitles); and a prior IAS 16 session associated with Oscar Bravo H.