Nigeria will expect increased Transfer Pricing (TP) compliance going forward as 72 percent of respondents in Andersen Tax survey believe the revised TP regulations will enhance their ease of compliance.
Nigeria first introduced TP regulations in 2012 but was repealed in 2018. Transfer pricing, according to Seyi Bickersteth, chairman, Andersen Tax Africa, is the utilisation of pricing policies between head offices and subsidiaries of multinational companies to achieve defined commercial tax objective, and usually the tax objectives are the minimisation of tax liabilities.
In its maiden edition of the review of Transfer Pricing Development in Africa, Andersen Tax, Nigeria, described TP as a major tax consideration for Multinational Enterprises (MNEs) across the world.
The firm conducted a country TP profile review by examining the TP compliance requirements; key TP developments and the TP audit experiences of MNEs operating in selected sub-Saharan African (SSA) countries including Ghana, Kenya, Nigeria, South Africa, Tanzania and Uganda.
“Our aim basically is to help both parties, to help multinationals who come into particular situations, especially SSA to understand the transfer pricing environment so that they can comply better. At the same time, we also want to help the host country to better understand the models that the multinational companies are bringing to determine what their pricing policy is and why it is very necessary for them to do that,” Bickersteth said.
Transfer pricing in Africa is life because there is a lot of demand for cash revenue, most government in SSA countries will continuously be tweaking in order to be able to get the tax revenue they need for developmental objectives, he said.
Speaking at the official unavailing of the report in Lagos, Josh Bamfo, partner and head, transfer pricing services, Andersen Tax, said the key objective was to try to help multinational enterprises coming to invest in SSA region.
“We know that this is a destination that a lot of foreign direct investors will like to come into,” Bamfo said.
The only source of worry is some of the uncertainties in the sub-region, he said. One of such uncertainties has to do with taxation, and because transfer pricing is an international tax issue, it pertains across sub regions.
“What we are trying to do is to do an in-depth review and research and be able to present to multinational enterprises and other foreign direct investors as to what are the requirements when it comes to transfer pricing regulations across the sub region – what are some of the compliance issues? What are some of the challenges of audits that pertain to the sub region? With that information, they will be work-equipped,” he said.
One of the objectives of the project, he said, is to help multinational enterprises make informed decisions when deciding to make investment in the SSA region.
“On the area of transfer pricing and tax in particular, we want to help the government to ensure that there is clear ease of doing business and there is clarity in terms of the challenges the foreign investors will face,” he said.
Following the introduction of TP in Nigeria in 2012, tax authorities carried out sensitisation campaign to educate the public on the requirements with respect to the TP regulations.
