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Tax Implication Of The Adoption Of The International Financial Reporting Standards (IFRS)
In line with section 8 of Federal Inland Revenue Service (FIRS) Establishment Act 2007, FIRS issued a draft circular in October 2012 to provide direction to stakeholders on the tax implications of the adoption of the International Financial Reporting Standards (IFRS). IFRS is expected to far have reaching implications on taxpayers, knowing that quoted companies are expected to adopt it, beginning from 2012, other businesses from 2013 while SMEs are to fully adopt the guidelines in 2014.
These is to give effect to the Federal Executive Council’s acceptance of the recommendation of the Committee on the roadmap for the adoption of IFRS in Nigeria, which places emphasis on the adoption of globally accepted accounting standards by reporting entities. The adoption of International Financial Reporting Standards (IFRS) in a phased transition in a process is to be supervised by the Financial Reporting Council of Nigeria(FRCN) formerly Nigerian Accounting Standards Board (NASB), under the supervision of the Nigerian Federal Ministry of Trade and Investment.
Section 55 (1) of the Companies Income Tax Act (CITA), Cap C21, LFN 2004 requires a company filing a return to submit its audited account with the Service while sections 8, 52 and 53 of the Financial Reporting Council of Nigeria Act, 2011 gave effect to the adoption of International Financial Reporting Standard. This implies that the audited accounts to be submitted to the Service after the adoption of International Financial Reporting Standard shall be prepared in compliance with standards issued by IFRS. It is in line with the above that FIRS has published these draft guidelines on tax treatments to be given to each of the Standards especially where there are deviations from the present Generally Accepted Accounting Practice (GAAP) after the adoption. The objective is to highlight some salient points in the FIRS draft policy document in alignment with the IFRS guidelines.
IFRS 1 – first time adoption -An entity shall prepare and present an opening IFRS statement of financial position at the date of transition to IFRS. This is the starting point for its accounting in accordance with IFRS. An entity shall use the same accounting policies in its opening IFRS statement of financial position and throughout all periods presented in its first IFRS financial statements. Those accounting policies shall comply with each IFRS effective at the end of its first IFRS reporting period.
In particular, the IFRS requires an entity to do the following in the opening IFRS statement of financial position that it prepares as a starting point for its accounting under IFRS:(a) recognise all assets and liabilities whose recognition is required by IFRSs; (b) not recognise items as assets or liabilities if IFRS do not permit such recognition. (a) reclassify items that it recognised in accordance with previous GAAP as one type of asset, liability or component of equity, but are a different type of asset, liability or component of equity in accordance with IFRSs; and (d) apply IFRS in measuring all recognised assets and liabilities”. FIRS draft guidelines emphasize that the new net asset based on the accounting balance shall be adopted for minimum tax computation and where dividend is paid from retained earnings, it shall be subject to tax in line with section 19 of CITA. Also the details of recognitions, de-recognitions and reconciliation must be forwarded to FIRS by the taxpayer including all adjustments to opening retained earnings. Furthermore entities shall have the option to either completely expense or spread within 3 years the revenue expense component of its cost of conversion to IFRS as first time adopters. All conversion cost (Capital & Revenue) must be verified and confirmed by the Service before it can be allowed as Qualified Capital Expenditure or expense. While any additional tax/refund as a result of the conversion shall be settled by the company or refunded by FIRS as may be agreed by FIRS within 3 years of adoption. For the treatment of Finance Lease the FIRS guideline notes that in compliance with IFRS re-classification of lease asset, there could be a situation whereby an operating lease becomes a finance lease. Where two parties had correctly applied the old principle but are now compelled by the IFRS standard to reclassify operating lease as finance lease, FIRS will rely on the Tax Written down value of the asset in granting further capital allowance to the leasee. Also, investment allowance and Initial allowance shall not be granted to the leasee on reclassification of the asset and where there are errors in compliance with previous standards on leases, the tax consequences resulting from the errors shall be adjusted for accordingly. For assets reclassified to finance lease, paragraph 18(2) and (3) of schedule two of CITA which relates to Rights to Claim Capital Allowances on finance lease shall apply. The guideline on finance lease as described in FIRS information circular No. 2010/01 dated 12th April, 2012 which relates to Value Added Tax (VAT) and With- Holding Tax (WHT) shall apply.
In IAS 19 – which dwells on employee benefits, the FIRS draft guidelines notes that provisions in respect of other long-term employee benefits (other than post- employment benefits and termination benefits) that are not due to be settled within twelve months after the end of the period in which the employees render the related service shall not be allowed for tax purposes until actual payment is made. Profit sharing and bonus payments shall be allowed for tax purposes only if the amount and basis for its computation has been agreed and approved at the beginning of the accounting period and notably Personal Income Tax is payable on the bonus and profit sharing in line with the provisions of Personal Income Tax (amended 2011). For Pension remittances employer’s contributions over and above the 7.5% compulsory threshold is an allowable deduction by virtue of the provision of the National Pension Commission Act (section 7 & 9 of Pension Act) and Actual contribution paid to the pension fund in the current year shall be allowed for tax purposes in line with the existing practice. The National Pension Commission has been empowered to approve defined benefit plan for any entity that wants to run it. However, FIRS must be satisfied that a proper scheme manager is appointed for the security of the fund before allowing any expenses on the scheme for tax purposes. Any provision charged to Statement of Comprehensive Income (SOCI) that does not have the approval of Pension Commission (PENCOM) and FIRS shall be disallowed. Provision made for benefits payable to the employees offered voluntary redundancy shall not be an allowable deduction for tax purposes unless they result into cash payment to the employees.
There is no doubt that the transition to IFRS is a huge task, with over 100 countries already signed to it. IFRS has become the global reporting standards for accounts and it is imperative for various stakeholders to work together to engender a workable solutions in terms of capacity and enlightenment on the cut off dates. Its revolutionary impact tax requires a great deal of decisiveness and commitment. It is a new world order in corporate reporting that will alter not only the financial accounting and reporting landscape in Nigeria but also tax accounting, tax cash flow and tax distributable reserves.
The post Tax Implication Of The Adoption Of The International Financial Reporting Standards (IFRS) appeared first on Peoples Daily Newspaper, Nigeria.
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•Deploy more personnel as army chief vows to wipe out terror group
•Security beefed up at N’Assembly
Deji Elumoye and Kingsley Nwezeh in Abuja
Abuja, Nigeria’s seat of power, is under a massive security cordon following threats of attacks by insurgents and the increasing wave of banditry in the contiguous states of Kaduna, Kogi, Nasarawa and Niger States, THISDAY’s investigation has revealed.
There has been a wave of kidnappings in the outskirts of the federal capital, notably Pegi, Tuganmaje and Kuje among others, which the police have battled in recent times.
The security situation in and around the Federal Capital Territory (FCT) was heightened by the pronouncement of the Niger State Governor, Mr. Sani Bello, that Boko Haram fighters who he said sacked 50 villages in the state and hoisted the terror group’s flag, were about two hours drive away from the FCT.
Security has also been beefed up at the National Assembly as operatives, yesterday, thoroughly screened every vehicle approaching the National Assembly complex in Abuja.
The deteriorating security situation nationwide prompted the National Chairman of the Peoples Democratic Party (PDP), Prince Uche Secondus, to warn that the 2023 general election may not hold, demanding the declaration of a state of emergency as well as the convocation of a national conference.
However, the Chief of Army Staff, Lt. Gen. Ibrahim Attahiru, yesterday restated the Nigerian Army’s determination to annihilate Boko Haram.
But the Governor of Katsina State, Hon. Bello Masari, cautioned against declaring a state of emergency, saying doing so isn’t the solution to combat the security challenges facing the country.
The security of the nation’s airports was also in focus yesterday as the Office of the National Security Adviser (ONSA) said there was no threat to them.
THISDAY’s investigations showed increased presence of troops, police, Nigerian Security and Civil Defence Corps (NSCDC) personnel and intelligence operatives at the three strategic entrances to the city notably, Keffi, Zuba and Gwagwalada.
More checkpoints were also mounted around Gwagwalada and Keffi.
THISDAY also observed increased intelligence deployment at the entrance and the borders of FCT with contiguous states.
Beyond the borders, there were more deployments and police patrols inside the city and increased intelligence deployments as well.
Security sources told THISDAY: “There are deployments here and there but they are routine. Alertness is key to a secure environment.”
It was also learnt that security agencies were involved in frenzied meetings throughout yesterday.
The meetings, coordinated by the office of the Chief of Defence Staff under the new joint operational strategy of the armed forces, were aimed at coordinating a joint response to possible threats of attack to the FCT.
“I understand the security teams have been meeting for some days now and if you look around you, you will notice that there are increasing patrols and numbers of security personnel. The threats are not been taken lightly,” a source said.
National Assembly workers, lawmakers and visitors also had a harrowing experience accessing the legislative complex due to heightened security in the area.
Security operatives thoroughly screened every vehicle approaching the National Assembly complex in Abuja, impeding both human and vehicular traffic.
The Sergeant-at-arm of the National Assembly and other security agencies supervised the operations, leading to huge traffic build-up inside the complex.
Legislative staff, visitors and lawmakers were seen patiently waiting for their cars to be searched so that they could go ahead with the business of the day.
Some staff and visitors at some point got tired of waiting and were seen alighting from their cars to trek from the gate to the complex.
Meanwhile, the ONSA has said there is no threat to the nation’s airports.
A statement by the Head of Strategic Communication, Mr. Zachari Usman, said the reports of threats to the airports were an internal correspondence of security threat assessment misconstrued as security threat to the airports.
PDP Demands State of Emergency
In a related development, the PDP National Chairman, Prince Uche Secondus, yesterday demanded the declaration of a state of emergency, warning that the 2023 general election might not hold if the federal government failed to tackle insecurity.
He called on the federal government to summon a national conference to address the spike in insecurity.
Secondus added that the national caucus of the party will meet today to discuss the state of the nation.
Addressing members of the National Executive Committee (NEC) in Abuja, Secondus said: “We are worried Abuja is not even safe. It is no longer politics. We got alert of plots to bomb and burn down our airports.
“We urge the federal government to declare a national state of emergency in security. There is the need to call a national conference to discuss the insecurity in the country.
“There may not be any election in 2023 in Nigeria due to insecurity. This government must listen to the people. The Buhari government should call a national confab to discuss security and state of the nation. It is no longer politics. This time we are not playing politics. Let’s keep politics aside and move the nation forward.”
He said the country had been grounded, regretting that there had been no matching response from the federal government.
Secondus said in the past, terrorism in the North was confined to the North-east, but with the report of Boko Haram occupying villages in Niger State, terrorism had spread to the North-central
“Herdsmen are also menacing in the West; gunmen causing havoc in the East; and the militants in the South; all killing, looting, raping, maiming and burning down homes. The situation is bad; Nigerians all over are living in fear,” he said.
The Senate Minority Leader, Senator Enyinnaya Abaribe, said the problem of Nigeria was outside of the PDP headquarters, while pledging the support of the Senate to the declaration of state of emergency in security.
Abaribe said he deliberately decided not to speak on the floor of the Senate but to allow the APC senators to speak so as to avoid being accused of giving a partisan colouration to the issue of insecurity.
He stated that only electoral reforms would give victory to the opposition party in the 2023 general election and ensure a democratic defeat of the APC-led federal government.
Also, the Minority Leader of the House of Representatives, Hon. Ndudi Elumelu, commended the NEC and the PDP leadership for their collective efforts at resolving the House leadership crisis.
The NEC meeting adopted the position of Secondus, calling on the federal government to convoke a national conference to discuss the state of insecurity in the country, according to a communiqué read by the National Publicity Secretary, Mr. Kola Ologbondiyan.
Army Chief Vows to Wipe Out Boko Haram
The army yesterday reiterated its commitment to wipe out Boko Haram.
Chief of Army Staff (COAS), Lt. Gen. Ibrahim Attahiru, told reporters in Maiduguri, Borno State that Boko Haram had been defeated in many encounters and would continue to be defeated until it’s annihilated from Nigeria.
“We will take on Boko Haram decisively, and we are committed to the focus of the operations, which is the total annihilation of Boko Haram from Nigeria,” he said.
The COAS, who was visiting the headquarters of Operation Lafiya Dole in Maiduguri for the fifth time since his appointment four months ago, said the visit was to boost the morale of the troops, reassure them and listen to any issues affecting them.
Earlier, the Theatre Commander of Operation Lafiya Dole, Maj. Gen. Farouq Yahaya, lauded the visit, which he said had continued to boost the morale of the troops.
“We are honoured, we are grateful, we are encouraged by those visits. You provided us guidance, logistics and other things we required. We are most grateful for those visits,” Yahaya said.
State of Emergency Won’t Solve Security Challenges, Says Masari
Katsina State Governor, Hon. Aminu Masari, has, however, said declaration of a state of emergency won’t solve the security challenges facing the nation.
Masari, who spoke yesterday with journalists after meeting with the Chief of Staff to the President, Prof. Ibrahim Gambari at the State House, Abuja stated that he was against the recent call by the House of Representatives for the declaration of a state of emergency in the security sector as it would not solve the problem.
According to him, declaring a state of emergency will not achieve the desired effect as the security structure and personnel to be used to execute the emergency are already overstretched in a bid to safeguard lives and property.
Sourced From: THISDAYLIVE
Tribune Online
Nigeria records 55 new COVID-19 infections, total now 165,110
The Nigeria Centre for Disease Control (NCDC) has recorded 62 new cases of COVID-19, bringing the total number of infections in the country to 165,110. The NCDC disclosed this on its official Twitter handle on Friday. “55 new cases of #COVID19Nigeria; Lagos-21, Yobe-19, Ogun-6, Akwa Ibom-3, Kaduna-2, Plateau-2, FCT-1, Rivers-1.” YOU SHOULD NOT MISS THESE HEADLINES FROM NIGERIAN TRIBUNE COVID-19: Nigeria Recorded […]
Nigeria records 55 new COVID-19 infections, total now 165,110
Tribune Online
Sourced From: Tribune Online
Kamaru Usman has raked in a mammoth £1.1million, about N584.2 million after his impressive knockout victory over Jorge Masvidal on Saturday night, Sportivation.com.ng reports.
The Nigerian Nightmare has been handsomely rewarded for his stunning performance and he was the best-paid fighter on the card which was witnessed by 15, 000 fans in Florida.
According to Daily Mail, Usman earned £538,000 to show up, £459,000 pay-per-view bonus, a £43,000 sponsorship bonus and a well deserved £35,000 Performance of the Night bonus.
Jorge Masvidal also earned £358,000 to show, £186,000 in pay-per-view money and a £28,000 sponsorship bonus.
This is the biggest payday of Usman’s career so far and the Welterweight champion also benefited from the fact that Masvidal is also a top draw for the fans.
Kamaru Usman is a Nigerian-American professional mixed martial artist, former freestyle wrestler and graduated folkstyle wrestler.
Sourced From: Latest Nigeria News, Nigerian Newspapers, Politics
The government said that no worker should stay back beyond 6:00 p.m. within premises of buildings undergoing construction.
The post Insecurity: Lagos bans occupation of abandoned buildings appeared first on Premium Times Nigeria.
Sourced From: Premium Times Nigeria
Nigeria records 55 new COVID-19 infections, total now 165,110
Military, Police Ring Abuja to Forestall Boko Haram Attack
UFC: Usman gets N584m after beating Masvidal
Insecurity: Lagos bans occupation of abandoned buildings
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