Taiwan Financial Institutions to Adopt IFRS 18 by 2028 for Enhanced Financial Transparency

The Financial Supervisory Commission (FSC) announced that starting from the 2028 fiscal year, Taiwan will implement the International Financial Reporting Standard No. 18 (IFRS 18), 'Presentation and Disclosure in Financial Statements.' This initiative, which applies to 14 financial holding companies, 37 publicly listed banks, and 7 publicly listed bills finance companies, aims to provide investors with a clearer understanding of profit sources.

The FSC is amending the 'Regulations Governing the Preparation of Financial Reports' for financial holding companies, banks, and bills finance companies, focusing on three key areas:

1. Restructuring the Income Statement: Revenues and expenses must now be categorized by operating, investing, financing, income tax, or discontinued operations. Financial institutions are required to classify items based on their core business activities. For example, interest income for banks will be categorized as 'operating,' while investment-related gains for holding companies will also fall under 'operating' to reflect their business nature.

2. Minor Adjustments to Balance Sheets, Cash Flow Statements, and Notes: The regulations mandate the separate disclosure of goodwill on the balance sheet, update cash flow statement formats to align with income statement changes, and require the disclosure of management-defined performance measures (MPM) in the notes.

3. Digitization of Financial Reporting: Moving toward a paperless system, all financial reports and related attachments starting from the second quarter of the current year must be submitted exclusively via electronic upload to the designated reporting website, eliminating the need for paper filings.

FSC officials stated that the public will see the first financial statements under these new standards in May 2028. This transition is aimed at structural transparency without altering the underlying financial results.