Abstract

International Financial Reporting Standard 1116(IFRS 16 lease) restricts the lessee’s option to lease. In other words, the lessee must capitalize as a licensed asset regardless of the lessor’s lease classification and recognize the lease liability at the same time. This will lead to changes in capital structure in many industries, such as many airlines and retailers. In addition, K－IFRS 1116 requires capitalization of leases excluding short－term leases and small amount leases, so tax adjustments are expected to increase in addition to financial effects in various industries such as distribution. In the current corporate tax law, the subject of processing of the leased asset is different and the subject of depreciation is different depending on the classification of the lessor. Therefore, in accordance with current tax laws, operating lease users will experience complicated tax adjustments and the importance of the amount will be significant. In addition, inadequate regulations in tax law, such as the classification of leased assets and the evaluation of lease liabilities, are expected to increase tax adjustment costs. Therefore, this study showed that it is necessary to amend the Restriction of Special Taxation Act or the Corporate Tax Act in respect of corporate accounting. It is expected that this study’s plan will help alleviate the cost of tax calculation due to the introduction of IFRS 16.

Keywords

• Lease
• K－IFRS 1116 (IFRS 16)
• Licensed assets
• Lessees
• Corporate tax law
• Tax adjustment

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