An accounting technical release (TR-27) ‘Income Taxes’ was issued on April 26, 1996, subsequently the same was revised in 2003, to provide guidance on the application of the requirements of IAS 12 (Income Taxes) in the case of companies which are subject to Final Tax Regime (FTR) as well as Normal Tax Regime, in the same “tax year”, under the applicable provisions of the Income Tax Ordinance, 2001 (the Ordinance). The guidance emphasised that deferred tax accounting does not apply to those companies which are entirely covered under FTR since such companies, it was argued, do not have a temporary difference which is a fundamental basis on which inter-period tax allocation is done through deferred tax accounting Guidance was sought from the Institute with regard to the above TR that in a situation where an entity is taxed under FTR at import stage under the Ordinance and a portion of the imported goods remain unsold at the balance sheet date (held and carried forward as inventory), how the said final tax should be accounted for in the financial statements prepared under the approved accounting standards as applicable in Pakistan.

As there are varying accounting practices being followed in the above matter therefore in order to establish a uniform accounting practice the Council on the recommendation of the Professional Standards and Technical Advisory Committee (PS&TAC) has approved for issuance to the members the enclosed TR-30 in its 196th meeting held on May 6, 2008.

2. WITHDRAWAL OF TR-19 ‘EXCISE DUTY – ACCOUNTING TREATMENT (REFORMATTED – 2000)’
Further on the recommendation of the PS&TAC, the Council in the aforesaid meeting has also decided to withdraw TR-19 ‘Excise Duty – Accounting Treatment’ (Reformatted – 2000) since it is felt that appropriate guidance is available in IAS 2 ‘Inventories’ on the matter. The revised Sectional Index is enclosed which is to be filed in Section C of Part I of Members’ Handbook Volume II.

Circular 6 – Issuance of Accounting Technical Release TR-30 – Final Tax Accounting