Subject. The article discusses the disclosure of information on uncertain tax positions in accordance with IFRIC 23 in the consolidated financial statements of Russian companies. Objectives. The study aims to identify contradictions as to information disclosure in the IFRS financial statements in accordance with IFRIC 23 and develop proposals to eliminate them. Methods. The study draws on the dialectical method of scientific cognition, analysis, comparison, synthesis, etc. Results. I found that 8 out of 25 analyzed companies tried to disclose information about reserves created for uncertain tax positions (income tax). Furthermore, I revealed that all the analyzed companies used different and ambiguous formulations and concepts when describing uncertain tax positions. The paper confirms that the requirements of IFRIC 23 are not strict, and therefore, in practice, Russian companies do not comply with them. Conclusions. The information disclosed by Russian companies about uncertain tax positions is neither clear nor plainly structured. Hence, external users, analyzing financial statements, may draw incorrect conclusions about the tax situation of the company. To eliminate the identified contradictions, Russian companies are encouraged to rely on US GAAP practice in terms of using unified accounting terminology and disclosing information about created reserves in tabular form.
Keywords: uncertain tax positions, unrecognized tax benefit, uncertain tax treatment, income tax, tax position
References:
Aksent'ev A. [Uncertain tax positions and benefits of tax reconciliation: International experience]. Vestnik universiteta, 2025, no. 5, pp. 93–104. (In Russ.) DOI: 10.26425/1816-4277-2025-5-93-104 EDN: FGDNXQ
Probasco R.D. Much Uncertainty About Uncertain Tax Positions. The Texas Tax Lawyer, 2010, vol. 37, 3. URL: Link
Mulford C.W., Pfeffer A. Understanding unrecognised tax benefits. Journal of Applied Research in Accounting and Finance (JARAF), 2014, vol. 9, no. 1. URL: Link
Wise D., Scutellaro J. Tax Ethical and Penalty Issues in the UTP Context: A Review After Five Years of Experience. The Tax Adviser, 2016. URL: Link
Aksent'ev A.A. [Unrecognized tax benefit: Methodological peculiarities of creation of reserve and influence of tax positions on occurrence of deferred taxes]. Vestnik NGUEU, 2023, no. 3, pp. 105–131. (In Russ.) DOI: 10.34020/2073-6495-2023-3-105-131 EDN: TRPMMN
Blouin J., Gleason C., Mills L., Sikes S. What Can We Learn about Uncertain Tax Benefits from FIN 48? National Tax Journal, 2007, vol. 60, no. 3, pp. 521–535. DOI: 10.17310/ntj.2007.3.11
Holtzman Y., Nagel P. Understanding the basics of SFAS 109. Journal of Management Development, 2011, vol. 30, no. 1, pp. 106–111. DOI: 10.1108/02621711111098406
Browne J.R. Financial reporting for uncertain tax Po Tax Notes, 2005, vol. 109, no. 1, pp. 77–92. URL: Link
Frischmann P.J., Shevlin T., Wilson R. Economic consequences of increasing the conformity in accounting for uncertain tax benefits. Journal of Accounting and Economics, 2008, vol. 2–3, no. 46, pp. 261–278. DOI: 10.1016/j.jacceco.2008.08.002
Lee R., Curatola A.P. Tax aggressiveness and the effects of potential detection for uncertain tax position reporting. Journal of Forensic & Investigative Accounting, 2015, vol. 7, no. 2, pp. 31–45. URL: Link
Gupta S., Laux R.C., Lynch D.P. Do Firms Use Tax Reserves to Meet Analysts’ Forecasts? Evidence from the Pre- and Post-FIN 48 Periods. Contemporary Accounting Research, 2016, vol. 33, no. 3, pp. 1044–1074. DOI: 10.1111/1911-3846.12180
Mills L.F., Robinson L.A., Sansing R.C. FIN 48 and Tax Compliance. The Accounting Review, 2010, vol. 85, no. 5, pp. 1721–1742. URL: Link
Robinson L.A., Schmidt A.P. Firm and Investor Responses to Uncertain Tax Benefit Disclosure Requirements. Journal of the American Taxation Association, 2013, vol. 35, no. 2, pp. 85–120. DOI: 10.2308/atax-50458
Robinson L.A., Stomberg B., Towery E.M. One Size Does Not Fit All: How the Uniform Rules of FIN 48 Affect the Relevance of Income Tax Accounting. The Accounting Review, 2016, vol. 91, no. 4, pp. 1195–1217. DOI: 10.2308/accr-51263
Gleason C.A., Mills L.F., Nessa M.L. Does FIN 48 improve firms’ estimates of tax reserves? Contemporary Accounting Research, 2018, vol. 35, no. 3, pp. 1395–1429. DOI: 10.1111/1911-3846.12320
