International Financial Reporting Standards

The purpose of this thesis would be to examine the legal situation regarding the IFRS-transition in Sweden. Sweden includes a close linkage between accounting and taxation, meaning accounting rules have a material effect on taxation. IFRS currently applies only on group level, and the group isn’t susceptible to tax. However, you will find already indirect tax effects to be observed since accounting practice in Sweden has changed because of IFRS. The most important potential impact on taxation in a Swedish context is fair valuation of certain assets. If IFRS is applied on legal-entity level under current tax rules, unrealized gains would set the realization principle and the principle of economic double taxation out of play. Therefore, the linkage is threatened by IFRSs accounting philosophy and happens to be susceptible to scrutiny by an investigating committee which will issue an answer in 2007….

Contents

1 Introduction
1.1 Background
1.2 Purpose
1.3 Method and limitations
1.4 Structure
2 IASB and the development of IFRSs
2.1 The IASB
2.2 Development of IFRSs
2.2.1 IASB Framework
2.2.1.1 Qualitative characteristics
2.3 Key features of IFRSs
2.3.1 Measurement bases – Fair values
3 IFRS in the EU
3.1 The IAS Regulation
3.1.1 Endorsement process
3.2 The Modernization Directive
4 Accounting and taxation in Sweden
4.1 Accounting
4.1.1 Basic accounting principles
4.2 GAAP – Legal standard
4.2.1 True and fair view in Swedish legislation
4.3 Swedish standard setting
4.4 Taxation
4.4.1 Basic principles of a company tax system
4.5 Swedish tax policy
4.5.1 The principle of economic double taxation
4.6 The linkage between accounting and taxation
4.6.1 Pros and cons of a linkage
4.6.2 Basics of the linkage
4.6.3 Material and formal linkage
4.6.4 The boundary between the engaged and disengaged area – case law
4.6.5 Heterogeneous accounting – Tax valves
5 Effects of the IFRS-transition
5.1 Introduction
5.2 Tax base determination by private standard setters
5.3 Current effects
5.3.1 Accounting standards – a two tier development
5.3.1.1 Categorization – Necessary for SMEs?
5.3.1.2 RR 32 and ÅRL-amendments
5.4 Direct effects – assumption of IFRS-application on legal entity level
5.4.1 Fair values
5.4.1.1 Tax effects on fair-value changes
5.4.2 Other tax effects…

International Financial Reporting Standards

Source: Stockholm School of Economics

International Financial Reporting Standards