2019 in Retrospect: A Review of Transfer Pricing in Nigeria and the Outlook for 2020
November 26, 2019
In the last few years, there have been significant developments in the Nigerian Transfer Pricing (TP) space. The Andersen Tax Digest of 29 January 2019 reviewed the significant developments that occurred in 2018, the potential impact for taxpayers and put forward an outlook for the Nigerian TP space in 2019 (the Outlook).
This article reviews the impact of these developments/changes during 2019, other developments within the TP space and the potential implications for taxpayers in 2020.
Overview of TP Developments in 2018
As mentioned in the Outlook, the end of 2018 saw an unprecedented flurry of activities in the TP space due to the introduction of the following TP related Regulations by the Federal Inland Revenue Service (FIRS):
- The Income Tax (Transfer Pricing) Regulations, 2018 (the Revised TP Regulations): The Regulations introduced significant changes to the Income Tax (Transfer Pricing) Regulations, 2012 (the 2012 TP Regulations) including a specific TP penalty regime in Nigeria.
Further to the release of the Revised TP Regulations, the FIRS issued a public notice which granted taxpayers till December 31, 2018 to fulfill all pending TP compliance obligations including filing of outstanding TP returns and submission of TP documentation requested by the FIRS.
- The Income Tax (Country-by-Country Reporting) Regulations, 2018 (CbCR Regulations): These Regulations required Multinational Enterprises (MNEs) headquartered in Nigeria with a consolidated group revenue of ₦160 billion or more to prepare a Country by Country (CbC) report which must be submitted not later than 12 months after the last day of the MNEs’ accounting year end. Constituent entities of the MNEs resident in Nigeria are required to notify the FIRS of the entity within the Group responsible for preparing and filing the CbC report before the end of any financial year. Penalties for non-compliance are also stipulated in the Regulations.
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