Tax financing agreements complement tax-sharing agreements and explain how subsidiaries finance the payment of tax by the main company and when the main company is required to make payments to subsidiaries for certain tax attributes generated by subsidiaries that benefit the group as a whole (for example. B tax losses and tax credits). Business groups are encouraged to consider entering into tax-sharing and tax financing agreements as part of their entry into the tax consolidation system. If they join the tax consolidation system, business groups need to think about how best to minimize the application of joint and several liability related to group income taxes. They must also consider the extent to which subsidiaries finance the payment of these debts by the main company. Both issues can be managed by business groups through tax-sharing agreements and tax financing agreements. Under the new international financial reporting standards, tax groups must ensure that they have a tax financing agreement that uses an «acceptable allocation method» under the «Urgent Questions» (UIG) group Interpretation 1052 Tax Consolidation Accounting. If the tax financing agreement does not use an «acceptable allocation method,» group members may be required to account for dividends and capital distributions or capital contributions in their accounts. Tax financing agreements also determine tax accounting inflows into the financial statements of tax group members (i.e., deferred tax assets and deferred tax liabilities). We have developed a wide range of precedents that document tax-sharing and tax financing regimes. Among these precedents, it should be noted that, to date, most consolidated tax groups have decided to allocate their income tax commitments based on the fictitious taxable income of each member of the group or on the basis of each member`s accounting income as a percentage of the group`s total accounting income.