The Impact of IFRS on Tax Revenue Reporting in Nigeria

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Background of the Study

International Financial Reporting Standards (IFRS) adoption in Nigeria has led to significant changes in the way financial statements are prepared, including tax revenue reporting. The shift to IFRS requires companies to use fair value accounting and different tax recognition rules, potentially affecting how tax revenues are reported. This study aims to evaluate the impact of IFRS adoption on tax revenue reporting in Nigeria, focusing on the implications for both tax authorities and businesses in terms of transparency, compliance, and revenue collection.

Statement of the Problem

Prior to the adoption of IFRS, Nigerian companies followed the local Generally Accepted Accounting Principles (GAAP), which may have led to discrepancies between reported profits and taxable income. The shift to IFRS introduces new complexities in the recognition and measurement of income, expenses, and taxes, potentially affecting the accuracy of tax revenue reporting. This study will assess how these changes have influenced the reporting of tax revenues and the overall tax collection process in Nigeria.

Aim and Objectives of the Study

The main aim of this study is to examine the impact of IFRS adoption on tax revenue reporting in Nigeria.

Specific objectives include:

1. To assess the changes in tax revenue reporting practices among Nigerian firms following IFRS adoption.
2. To evaluate the effect of IFRS on the accuracy and transparency of tax reporting.
3. To explore the implications of IFRS adoption for Nigerian tax authorities and their tax revenue collection mechanisms.
4. To identify challenges faced by Nigerian companies and tax authorities in adapting to the new tax reporting framework under IFRS.

Research Questions

1. How has IFRS adoption impacted tax revenue reporting practices in Nigeria?
2. What are the challenges Nigerian firms face in complying with tax revenue reporting requirements under IFRS?
3. How has the adoption of IFRS influenced tax transparency and the accuracy of tax reporting?
4. What are the implications of IFRS adoption on tax authorities' ability to collect revenue effectively?

Research Hypotheses

1. IFRS adoption has significantly improved the accuracy and transparency of tax revenue reporting in Nigerian companies.
2. The implementation of IFRS has increased the compliance costs associated with tax revenue reporting for Nigerian firms.
3. The adoption of IFRS has improved the ability of Nigerian tax authorities to assess and collect taxes.

Significance of the Study

The findings will provide valuable insights into the impact of IFRS on tax revenue reporting, offering guidance to policymakers, tax authorities, and businesses in Nigeria. The study will also help identify challenges in tax reporting and offer solutions to improve tax collection under the new IFRS framework.

Scope and Limitation of the Study

The study will focus on Nigerian companies listed on the Nigerian Stock Exchange (NSE) and their tax revenue reporting practices. Limitations may include access to detailed tax reporting data and potential variations in the adoption of IFRS across industries.

Definition of Terms

• IFRS: International Financial Reporting Standards, a set of global accounting standards governing financial reporting.
• Tax Revenue Reporting: The process of disclosing and reporting tax liabilities, income, and expenses in financial statements.
• Tax Authorities: Government agencies responsible for the assessment and collection of taxes.

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