The new Circular on the tax implications of the adoption of IFRS recently released by the FIRS has been amended. Apart from the inclusion of a publication date, the major change is in paragraph 13.1 regarding the effects of changes in foreign exchange rates. The paragraph which initially reads:
“Income tax assessment shall be made in Nigerian Currency (Naira) subject to the exceptions provided in the tax laws.”
has been amended to read:
“The presentation currency for the purposes of tax returns shall be the Nigerian Currency (Naira) except as otherwise provided in the tax laws. The currency for tax assessment shall be in line with the provisions of the relevant tax laws. ”.
I understand from the FIRS that the change is to ensure consistency with the Revenue’s intention to assess taxes (including income tax) in the currency of transaction rather than Naira as is currently the case.