October 8, 2018
The FIRS has issued a Public Notice (PN) providing additional information on its recently released Income Tax (Transfer Pricing) Regulations 2018 (TP Regulations). The FIRS also issued an Information Circular No: 2018/03 (the Circular) with specific guidelines on TP documentation requirements in Nigeria for the benefit of all relevant stakeholders.
Public Notice on the TP Regulations
The PN reiterates that the commencement date of the TP Regulations is 12 March 2018. However, the FIRS will grant taxpayers a grace period up to 31 December 2018 to enable them to fulfil all outstanding TP obligations such as filing of TP returns and submission of TP documentation etc. Nonetheless, the FIRS shall commence full imposition of the administrative penalties contained in the TP Regulations in the event of failure to regularize these obligations at the expiry of the grace period.
Guidelines on TP Documentation
The Circular addresses broad issues relating to the form and content of TP documentation. Some of the specific guidelines in the Circular include the following:
- Where the total value of controlled transactions is less than N300million;
- Where the related party transactions are covered by an Advance Pricing Agreement (APA), provided that the taxpayers keep to the terms of the APA;
- Where the related party transactions are priced in accordance with the requirement of Nigerian statutory provisions. For example, prices regulated by statute;
- In any other situation mentioned in other guidelines that would be issued from time to time.
The issuance of the PN and the Circular indicates the FIRS’ readiness to fully implement the provisions of the TP Regulations. In view of the huge administrative penalties and increased compliance requirements, taxpayers are encouraged to be proactive and put in place measures to fulfil all outstanding TP compliance obligations before 31 December 2018 and ensure compliance with the new TP Regulations.
Follow this link to download the FIRS’ publications.