Examining the tax implications for the adoption of international financial reporting standards (IFRS) in Ghana

Abstract

This paper examines the tax implications of listed companies in Ghana for the adoption of International Financial Reporting Standards (IFRS), particularly International Accounting Standard (IAS) 12. Financial statements from annual reports for twenty two (22) firms were used for the analysis. A theory of accounting choice was used as the theoretical framework with all other relevant related literature reviewed. A sequential explanatory strategy for mixed methods research approach was used with data sourced from three different sources; that is observation and extraction from financial statements, questionnaire and an interview guide. The results triangulate to indicate that there are tax implications following the adoption of IFRS particularly IAS 12 by listed firms in Ghana. Current year tax expenses of entities on average reduce marginally by 0.2% when restated in IFRS from GNAS. In terms of reported tax amounts by industries, manufacturing/trading entities showed increases in current year tax expenses by 13% while financial/insurance/information technology companies saw decreases in their current year tax expenses by 13.3%. It also reveals that there are no differences between GNAS and IFRS reported amounts of corporate taxes. The study provides empirical evidence to create the awareness of tax implications for the adoption of IFRSs in Ghana.