IASB Update July 2026: IFRS 16 Post-Implementation Review Concludes, IFRS 18 Tax Charge Classification Advances

Post-implementation Review of IFRS 16 — Requirements Confirmed as Working

The IASB has concluded its Post-implementation Review (PIR) of IFRS 16 Leases, unanimously agreeing (12 of 12 members) that the standard's requirements are overall working as intended. This is a significant milestone: PIRs are the mechanism by which the Board formally assesses whether a standard is delivering the intended improvements in financial reporting after several years of application, and a clean "working as intended" outcome means no fundamental overhaul is planned.

That said, the review did surface several narrower issues the Board agreed to pursue:

• New research project on cost mitigation for lessees, focused specifically on the remeasurement of lease liabilities and the selection of discount rates — an area preparers have flagged as operationally burdensome.
• New narrow-scope project clarifying how a lessee applies IFRS 16 alongside IFRS 9 Financial Instruments when accounting for rent concessions.
• Cash flow disclosures: the Board tentatively decided (11 of 12 agreed) to explore requiring lessees to disclose the components of total lease-related cash outflow, together with the specific line item in the statement of cash flows where each component is presented.
• Single-asset sale-and-leaseback questions will be considered in the Board's next agenda consultation rather than as a standalone project, and the related item has been removed from the maintenance pipeline.

Subject to Due Process Oversight Committee approval, the IASB expects to publish a project summary and feedback statement on the PIR in Q4 2026.

IFRS 18 — Classifying Tax Charges That Substitute for Income Tax

Separately, the Board advanced its work on IFRS 18 Presentation and Disclosure in Financial Statements, specifically on how entities should present taxes or other charges that are not strictly income tax under IAS 12 but function as one economically — including some non-income tax charges that have drawn attention under the OECD Pillar Two model rules.

By a vote of 10 to 2, the Board tentatively decided to require an entity to classify, within the income taxes category of the statement of profit or loss, tax charges imposed by a government as a direct substitute for income taxes — but only where the underlying legislation specifies that the taxpayer must pay either income tax or a specified alternative charge (i.e., the charges are mutually exclusive alternatives, not additive).

To support this, the Board also tentatively decided (11 of 12 agreed) that entities must:

• Disaggregate these substitute tax charges from ordinary income tax expense;
• Disclose the nature of the charge and the basis on which it is calculated; and
• Label any profit subtotals affected by the reclassification appropriately, so users can distinguish substitute charges from conventional income tax.

The Board will continue redeliberating the remaining aspects of the IFRS 18 amendment at future meetings — this is not yet a final standard.

Why It Matters

For lessees, the PIR outcome is largely reassuring: no wholesale changes to lease accounting are coming, though the cash flow disclosure and rent concession clarifications are worth tracking if your lease population is material. For preparers navigating Pillar Two or similar substitute-tax regimes, the IFRS 18 tentative decision is the clearest signal yet on how these charges should be presented — worth flagging to tax and reporting teams now, ahead of final wording.