Lacuna in tax laws as IFRS adoption looms

By Dinali Goonewardene

As International Financial Reporting Standards (IFRS) are to be adopted in Sri Lanka from 1 January 2012, a question looms as to how tax liabilities will be calculated under the new standards.

The tax laws may be changed in order to fall in line with the IFRS or another set of accounts prepared to calculate tax profits, said KPMG Sri Lanka Partner – Tax and Regulatory Shamila Jayasekara at a presentation yesterday.

The presentation was held by the Association of Chartered Certified Accountants (ACCA) and KPMG Ford Rhodes Thornton on ‘International Financial Reporting Standards Implementation – The Next Steps’. “The Inland Revenue Department and Treasury both have to look at the laws and I don’t know whether they would be ready by 2012,” Jayasekara said.    

In India it has been recommended that the ministry look into a different set of accounts for tax, KPMG India Executive Director – Accounting and Advisory Services V. Venkataramanan said. “If you start with accounting profits you have to strip out certain adjustments,” he added.“With six months to go for the implementation of IFRS, the road ahead is rough and the ACCA has been actively promoting knowledge dissemination in the wake of the adoption of IFRS,” said KPMG Sri Lanka Partner and Head of Advisory Services Reyaz Mihular.