AS International Financial Reporting Standards (IFRS) berths in Nigeria, experts have called on the Federal Inland Revenue Service (FIRS) to issue a clear cut policy statement on implementation of IFRS on taxation to reduce the various and expected challenges pose by the standard on tax practice and administration.At a three-day seminar on tax implications of IFRS in Nigeria, organised by Ijewere Company, in collaboration with UK-based Entop Consulting Limited, the experts said Nigeria needs such tax policy in relation with the adoption IFRS to avoid confusion for tax payers, as currently experienced by those already using the standard.Managing Partner of Ijewere Company, Rufus Jegede, said that the need for such tax policy could not be overemphasised as there were values in accounting that are not recognised by tax laws.He, therefore, urged FIRS to issue out policy statement to enable accountants to know what to expect when at across road with taxation and IFRS.IFRS Consultant for Entop, Innocent Ukwuosa, regretted that Nigeria has been talking about the adoption of IFRS without discussing its tax implications.He revealed that the banking sector, which has already adopted the standard, has started having challenges with it in the area of tax remittance.Jegede said: 'There are so many areas where we may have challenges with application of IFRS on taxation. The standard is talking of fair value for instance, but fair value has never been accepted by tax laws. The standard also deal with impairment of asset, which is not presently covered by tax law. And there are some terms that are used in IFRS that are either not properly treated in the tax law or are non-existent.'We are, therefore, calling onFederal Inland Revenue Service (FIRS) to come out with a statement on what people should expect from it when they submit their account statement so that the tax accountants should be aware of issues they need to resolve with inland revenue.'This is important in that accounts as prepared by accountants are used as raw material to determine the tax liability. If the accountant is saying one thing but the tax law is saying another thing, there would not be common ground for both to meet. There are values in accounting that are not recognised by the tax law. That means for tax purposes, the accountant should be prepared to meet the tax requirement.'Ukwuosa said: 'We have been talking about IFRS adoption without aligning the standard with tax implications that would arise from adopting the international financial reporting. But there are tax implications of adopting IFRS. From IFRS perspectives, there are many rules guiding asset recognition. But the question is when do you recognise asset''IFRS would say that you recognise asset through fair value model. But would fair value model be acceptable to the taxman' There are many issues to deal with so that there may be need to amend tax law or take a position on contentious issues.'Therefore, FIRS should come out to declare its position on those controversial areas that arise as a result of IFRS adoption.
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