CERTYNEX IFRS ACADEMY

The distributor Corbanis owes a 'territorial equity levy' equal to 0.5% of its gross revenue, payable whether the year is profitable or loss-making (case data). The financial controller proposes including it in income tax expense and computing deferred tax on it. Which analysis should be adopted?

The proposal is correct: the levy is collected by the tax authorities, so it falls under IAS 12.

The levy falls under IAS 12 only for the years in which Corbanis makes a profit.

The levy is not an income tax: with no profit basis, it is outside IAS 12.

The levy falls under IAS 12, but with no deferred tax, like Pillar Two taxes.