Tax implications of the accounting treatment of IAS 16 Property, Plant and Equipment, as well as IFRS 15 Revenue from Ordinary Activities Prior to Contracts with Clients

Abstract

This article is a descriptive and non-experimental explanatory research that seeks to analyze and publicize the differences between the accounting and tax treatment of fixed assets, as well as a critical analysis of the new rules for the recognition of income and expenses as a result of its validity of Legislative Decree No. 1425, published on September 12, 2018, and its regulations, approved by Supreme Decree No. 339-2018-EF and published on December 29, 2018. For this, two International Financial Reporting Standards are considered as references, IAS 16 Property, Plant and Equipment, and IFRS 15 Income from Ordinary Activities from Contracts with Clients; and article 57 of the Income Tax Law (LIR) modified by Legislative Decree No. 1425 and its regulations. Through this analysis, the legislator is proposed to make some clarifications in the law and in the income tax regulations regarding the new rules for imputation of income and expenses modified by the aforementioned decrees. In the same way, this paper analyzes and reports to the sectors the tax implications of the accounting treatment of IAS 16 and IFRS 15 referred to above, in order to prevent taxpayers from making errors in the calculation of income tax and, consequently, incur possible tax contingencies.