January 25, 2018
The Federal Inland Revenue Service (FIRS) through its official twitter handle communicated that the Income Tax (Country by Country Reporting) Regulations, 2018 (the Regulations) has now been signed by the Federal Government of Nigeria. This will give effect to the Country-by-Country Multilateral Competent Authority Agreement signed on 27 January 2016 and ratified on 3 August, 2016.
— FIRS Nigeria (@firsNigeria) January 24, 2018
The report on Action 13 of the Base Erosion and Profit Shifting (BEPS) Project recommends that signatory countries develop local rules regarding Country-by-Country Reporting (CbCR) to enhance transparency in tax administration. The report also provides a template for Multinational Enterprises (MNEs) to provide government with necessary information on their global allocation of income, economic activities and taxes paid in countries where MNEs have economic footprints.
The Regulations, when gazetted, will require MNEs headquartered in Nigeria that meet the specified threshold of global revenue to disclose the relevant information to the FIRS on annual basis. This information will automatically be available to other signatory jurisdictions. Similarly, the FIRS will have access to relevant global information of MNEs with subsidiaries in Nigeria.
This will usher Nigerian taxpayers into a post-BEPS era of unprecedented level of transparency, resulting in increased scrutiny by FIRS. Thus, MNEs should take proactive steps to mitigate Transfer Pricing (TP) risk exposures by conducting holistic review of their TP practices.