The Federal Government of Nigeria through the Federal Inland Revenue Service (FIRS) has issued a revised income Tax (Transfer Pricing) Regulations, 2018 effective March 12, 2018, thereby revoking the old Regulations.
Objective Of The New Regulations
The Regulations were issued to ensure alignment with the developments in international tax practice as it relates to Transfer Pricing (TP) particularly the Base Erosion and Profit Shifting (BEPS) project embarked upon by the Organisation for Economic Cooperation and Development (OECD) on the request of the finance ministers of the G20 countries.
The OECD developed thirteen (13) Action Points to mitigate BEPS. Action Point 8 to 10 (Aligning transfer pricing outcomes with value creation) and Action Point 13 (Transfer Pricing Documentation and Country by Country Reporting) focused on intangibles, contractual allocation of risks between Multinational Entities (MNEs), level of returns to funding provided by a capital-rich MNE group members and the requirements for filing “Master and Local files” among other issues.