This week, the FASB issued an amendment to a previously proposed Accounting Standards Update that would, if approved, “enhance the transparency” of public companies’ reporting of income taxes paid. FASB Accounting Standards Update (ASU) No. 2023-ED100. In doing so, FASB seems to make a baby step toward embracing CbC reporting for book purposes.
Currently, public companies disclose their cash taxes paid only in the aggregate as part of their tax reconciliation tables. At the highest level, FASB’s proposal would require them to “disaggregate” the amount of cash tax paid by breaking the total down by federal, state, and foreign, while detailing the individual jurisdictions that represent 5% or more of the total cash tax paid. FASB explains that investors have been clamoring for more geographical information on tax liabilities so that they may appropriately handicap the company’s exposure to potential changes in jurisdictional tax legislation.
FASB invites comments on the proposal by May 30, 2023.