This week, the FASB issued an amendment to a previously proposed update to accounting standards that, if passed, would “increase transparency” in the reporting of income taxes paid by public companies. FASB (ASU) Accounting Standards Update No. 2023-ED100. In doing so, FASB appears to be taking a small step towards the adoption of CbC reporting for book purposes.
Currently, public companies only report their cash taxes paid in aggregate as part of their tax reconciliation tables. At the highest level, the FASB’s proposal would require them to “disaggregate” the amount of cash tax paid by splitting the total into federal, state, and foreign, while specifying individual jurisdictions that account for 5% or more of the tax. total cash paid . FASB explains that investors have clamored for more geographic information on tax liabilities so that they can conveniently hinder the company’s exposure to potential changes in jurisdictional tax law.
FASB invites comments on the proposal by 30 May 2023.