Tuesday August 28,
2018 05:24PM / By Seun Adu @ATAFtax
Inland Revenue Service has published Nigeria’s revised Transfer Pricing
Regulations (NTPR). The NTPR
is effective for basis periods commencing after 12 March 2018 and
BEPS outcomes and
suggestions from The African Tax
significant penalties for non-compliance
failure to file TP declaration = ₦10million + ₦10,000/month
failure to file updated TP declaration/notification = ₦25,000/day.
failure to file TP disclosure = ₦10million or 1% of the value of related party transactions (RPT) not
disclosed + ₦10,000/day
filing incorrect disclosure = ₦10million or 1% of the value of RPT incorrectly disclosed.
failure to file TP documentation upon request = ₦10million or 1% of the total value of RPTs + ₦10,000/day (f) failure
to furnish information upon request = 1% of the value of each RPT for which information
relates + ₦10,000/day
NTPR follows The African Tax Administration Forum suggested
approach and introduces a cap of 5% of EBITDA on tax deductibility of royalty
payments. This is not consistent with the arm’s length principle. It also
questionable if such a change can be made via Regulations.
NTPR requires taxpayers to
prepare BEPS Master
File and Local File as part of TP document.
exempts taxpayers with total RPT values less than ₦300million from preparing TP document. However, they
must submit the TP document within 90 days’ notice from Federal Inland Revenue
NTPR suggests FIRS will not automatically accept
prices accepted for Nigeria customs valuation purposes. This could expose
taxpayers to double taxation.
NTPR gives effect to
the anti-avoidance provisions in CITA, PITA, PPTA, CGTA and VATA. This suggests
FIRS may be signaling its
intention to look into the VAT impact of TP adjustments.
definition of persons covered under the regulations (connected persons) to
include persons considered related or associated in VATA, and OECD tax and UN TP guidelines.
FIRS will publish specific
guidelines on safe harbors from time-to-time
of FIRS TP unit will now have the
power to make decision on whether a case/assessment should be referred to the
Decision Review Panel. Taxpayer will no longer have this right.
NTPR introduces provision
similar to BEPS provision
on capital-rich, low-function companies.
Related News on Transfer Pricing
2. Nigeria Transfer Pricing Regulations – A Review of the
Contending – May 2018
3. The OECD Releases 2017 Revised Transfer Pricing
Guidelines - Tax – Jul
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9. An Overview of Nigeria’s 2018 Income Tax (Country By
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11. The Case For The Removal Of Custom Duty (Tariff) On
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