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US FIN 48: Time is running out to complete your review
by
RSM Thailand
US FIN 48 the US Financial Accounting Standards Board Interpretation No 48 Accounting for Uncertainty in Income Tax applies to all US public and US private entities that prepare financial statements under US Generally Accepted Accounting Principles (US GAAP).
If your entity in Thailand must comply with US GAAP and you have not yet done your FIN 48 review, your time is running out.
The requirements under a FIN 48 review take a little bit of effort to do properly, and you need to complete this review in order for your auditors to sign off on the required disclosures under FIN 48 for US GAAP financial statements.
For entities in Thailand that are required to comply, the below summary of the review process and the required documentation could be useful for your FIN 48 review.
Basically, you are required to identify and analyze Uncertain Tax Positions (UTPs) that may possibly result in a tax liability for your entity. But in order to do this, you are generally required to:
Discuss and agree with your auditor the areas of focus and the work to be performed in order for the auditor to be able to sign off the FIN 48 disclosures that are required under the US GAAP financial statements;
Review your transactions, virtually on a type-of-transaction basis and confirm the tax compliance treatment thereof. If any tax position has been taken in relation to any tax benefit applying to a type-of-transaction, you would need to assess whether or not you would be granted entitlement to that tax benefit under a tax investigation of that type-of-transaction, which may require you to analyze not only the Thai tax law, but also prescriptions in a Double Tax Treaty and the practices of the local Thailand Revenue officers;
Review also the status of the entity itself for any tax positions taken and any potential tax liability, for example, whether or not the entity has exposure to permanent establishment tax either in Thailand or in a another jurisdiction in SE Asia in which the entity could be deemed to be carrying on business;
Review any potential tax exposures or risks in your accounting policies, book / tax differences and/or any prior tax audits, etc;
Prepare a summary of all the potential UTPs for all the open tax years. This summary includes the recognition and measurement of the UTP, the position taken, and any potential penalty and surcharge (interest) amount; and
Prepare a memorandum summarizing the review procedures undertaken and the outcome of the review and provide that memorandum to your auditors for their review and agreement.
It is important to emphasize that the FIN 48 review must be performed for all open years , which in Thai terms means for at least the entity s past two financial years, or in the case where tax evasion could be deemed by the Thailand Revenue officers, for the entity s past five financial years.
For US GAAP financial statement entities in Thailand with a December 31, 2010 financial year-end date, the FIN 48 review work should be well underway by now
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