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US GAAP
| IFRS
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Taxes based on a gross amount are not accounted for as income taxes and should be reported as pre-tax items.
Prior to adoption of ASU 2019-12, if a hybrid tax is based on the greater of an income-based calculation and a non-income-based calculation, the amount of tax based on the non-income-based calculation should be accounted for outside of ASC 740 (i.e., above the line) in the period incurred. Only any incremental amount calculated under income-based tax should be accounted for as income tax expense under ASC 740.
After adoption of ASU 2019-12, if a hybrid tax is based on the greater of an income-based calculation and a non-income-based calculation, the amount of tax that is based on income should be accounted for under ASC 740 as an income-based tax, with any incremental amount accounted for as a non-income-based tax (i.e., above the line) recognized entirely in the period incurred.
Deferred taxes should be recognized and measured according to that classification.
| Accounting for hybrid taxes is not specifically addressed within IFRS.
Applying the principles in IAS 12 to the accounting for hybrid taxes, entities can adopt either one of the following approaches and apply it consistently:
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