Quantitative Analysis of the Relationship Between IFRS and Deferred Tax Liabilities in Nigeria
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Background of the Study
Deferred tax liabilities (DTLs) arise when a company's taxable income is less than its accounting income, creating a timing difference between the recognition of income for accounting and tax purposes. The adoption of IFRS introduced new accounting treatments for income taxes, affecting the recognition and measurement of deferred taxes. This study will quantitatively analyze the relationship between IFRS adoption and the treatment of deferred tax liabilities in Nigerian firms, with a focus on whether IFRS has impacted the recognition, measurement, and reporting of DTLs.
Statement of the Problem
With the implementation of IFRS, Nigerian companies face new requirements regarding the recognition and measurement of deferred tax liabilities. The complexities associated with IFRS, including its focus on fair value accounting and future tax consequences, may influence how deferred tax liabilities are reported. This study aims to explore the impact of IFRS adoption on the reporting of DTLs by Nigerian companies.
Aim and Objectives of the Study
The main aim of this study is to quantitatively analyze the relationship between IFRS adoption and deferred tax liabilities in Nigerian firms.
Specific objectives include:
- To examine the changes in the recognition and measurement of deferred tax liabilities following IFRS adoption.
- To determine the impact of IFRS on the reported value of deferred tax liabilities in Nigerian firms.
- To explore the influence of company size, industry, and profitability on the level of deferred tax liabilities under IFRS.
- To analyze the impact of IFRS adoption on the overall tax burden of Nigerian firms.
Research Questions
- How has IFRS adoption affected the recognition and measurement of deferred tax liabilities in Nigerian companies?
- What factors influence the level of deferred tax liabilities reported by Nigerian companies under IFRS?
- How does IFRS adoption affect the overall tax burden and tax planning strategies of Nigerian firms?
Research Hypotheses
- IFRS adoption has significantly changed the way deferred tax liabilities are recognized and measured in Nigerian firms.
- The size, profitability, and industry of Nigerian firms influence the level of deferred tax liabilities reported under IFRS.
- IFRS adoption has led to a reduction in the overall tax burden of Nigerian firms due to changes in deferred tax treatment.
Significance of the Study
This study will provide a quantitative analysis of how IFRS adoption affects deferred tax liabilities, offering insights into the financial and tax implications for Nigerian companies. It will also inform tax policymakers and accountants about the broader consequences of IFRS adoption on deferred taxes.
Scope and Limitation of the Study
The study will focus on Nigerian publicly listed companies that have adopted IFRS. Limitations may include the difficulty of accessing detailed tax and accounting data related to deferred tax liabilities.
Definition of Terms
- IFRS: International Financial Reporting Standards, a global accounting framework that provides guidelines for financial reporting.
- Deferred Tax Liabilities (DTLs): Taxes that a company owes in the future due to differences in the timing of income and expense recognition for tax and accounting purposes.
- Tax Burden: The total tax liabilities of a company based on its financial activities.
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