• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/17/2013

Nigeria - Tax implications of adopting IFRS 

July 17: The Nigerian tax authority in June 2013 released guidance concerning the tax implications of adopting the International Financial Reporting Standards (IFRS).

The Nigerian Federal Inland Revenue Service’s Information Circular on the Tax Implications of the Adoption of International Financial Reporting Standards (IFRS) addresses some tax issues that would arise from the adoption of IFRS—which would replace the current accounting regime, Nigerian Generally Accepted Accounting Principles (NGAAP)

Provisions in the tax circular address:

  • No re-computation of prior year income tax by first-time adopters of IFRS
  • Claims of capital allowances
  • Threshold amounts concerning property, plant and equipment (PPE)
  • Deferred consideration arrangements
  • Tax treatment of intangible assets
  • Non-deductibility of professional fees and valuation expenses with respect to assets
  • Extension of time to file income tax returns
  • Information to be included with income tax returns

The circular offers clarifications as to how certain assets, expenses, and income will be treated for tax purposes under the IFRS regime. It also highlights the Nigerian tax authority's position on other issues, such as the tax treatment of valuation expenses and the tax depreciation of intangible assets

KPMG observation

In light of the tax authority’s release of the recent IFRS-related tax guidance, taxpayers now need to assess the tax effects of IFRS adoption on their business operations (so as to avoid or better manage potential tax exposures that may arise from the adoption of IFRS) and to adopt accounting policies that are both IFRS-compliant and tax- efficient.

Read a July 2013 report [PDF 228 KB] prepared by the KPMG member firm in Nigeria: The Impact of IFRS on Tax in Nigeria (Part 3)

Also included in the report is a table indicating information / disclosure requirements for first-time and repeat IFRS taxpayers.

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