Transfer Pricing and the Regulations in Nigerian Milieu

Abstract

The main objective of this paper is to provide an overview of the transfer pricing practices and highlight the newly adopted regulations on transfer pricing in Nigeria. Due to the increase numbers of multinational corporations in the country, reports show that the transfer pricing activities by these entities has resulted in economics lost and a large amount of net resources being carried way from the region. These unethical exercises had signal clearly of the serious need to amend the massive leakages of economic resources. Over decades, Nigeria has worked tirelessly to develop its own transfer pricing formulae and finally the Income Tax (Transfer Pricing) Regulations No. 1, 2012 (or known as TP Regulations) has been published on 21 September 2012. Specifically, the TP Regulations in Nigeria served as the mechanisms that the Government through the tax authority can use to combat the misused of transfer pricing practices. This paper also highlights some issues that need to be strengthen and future challenges in implementing the regulations. Some recommendations are also provided at the end of the paper to the tax authority and policy makers to enhance and improve the governance of transfer pricing matters in the country.