Global Daily Tax News, Malta Guides On IFRS 17 Transitional Rules, (Feb 12, 2025)

Malta's Commissioner for Revenue has released new guidance on the impact of International Financial Reporting Standard 17, Insurance Contracts.

IFRS 17 establishes comprehensive principles for the recognition, measurement, presentation, and disclosure of insurance contracts within its scope. The objective is to provide relevant information that faithfully represents these contracts, allowing users of financial statements to assess their impact on an entity's financial position, performance, and cash flows. IFRS 17 is effective for annual reporting periods beginning on or after January 1, 2023.

The guidance discusses rules intended to support insurers with the transitional impact of changes in the recognition of profits under IFRS 17, compared to the previous IFRS 4 standard, which may result in significant gains or losses for insurers in the first year of implementation. Malta has provided that the tax impact of these gains may be staggered over a maximum period of five years.

The guidance sets out the rules on taxpayers who wish to avail themselves of this concession, including eligibility conditions, the election process and registration, and deadlines. Exceptionally for applications for the first year, an election may be made by the extended date of November 22, 2024.