Understanding the impact of COVID-19 on your 2020 deferred tax provision

The COVID-19 pandemic is having a tremendous impact on the world’s economy. Many businesses are struggling to stay afloat and doing whatever they can right now to rationalise costs and preserve any cash surpluses they have in order to bridge future cash flow needs. Around the world governments are stepping in to try and limit the impact of the pandemic by providing financial support in numerous ways from direct cash payments through to the deferral of tax payments.

This article sets out four key areas of your tax provision that could be affected by the impacts of COVID-19. More specifically we focus on how government support in the form of tax incentives and tax relief might change
previous assessments that were made applying IAS 12 ‘Income Taxes’ (IAS 12). A key point to be mindful of is that any one of the following may be applicable if interim financial statements under IAS 34 ‘Interim Financial Reporting’ (IAS 34) are being prepared.