Global

Details

  • Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 10/22/2012

Nigeria - Transfer pricing regulations have August 2012 effective date 

October 22: The effective date for Nigeria’s transfer pricing regulations is 2 August 2012 (which is the date that the regulations were signed). The regulations were released on 23 October 2012. Among the provisions of the transfer pricing regulations (as proposed) are:
  • The definition of “connected taxable persons” to include related persons, individuals, companies, partnerships, joint ventures, trusts, or associations
  • Rules for applicable transactions (i.e., controlled transactions or commercial and financial transactions between connected taxable persons)
  • Requirements for companies in preparing their transfer pricing documentation, including the use of appropriate methods and that the documents are to be prepared before the due date for filing the income tax return

For certain taxpayers, the proposed transfer pricing regulations will present challenges if certain connected transactions are not proactively identified and addressed. For example, among such areas would be the following:


  • Turnover based on cost-plus mark-up arrangements—which may be of particular concern in the oil services industry
  • Deemed profit rate—possibly warranting a transfer pricing study for non-resident companies that previously filed their income tax returns on a deemed profit basis
  • Interest-free and below-market interest rate loans—which will need to be at an arm’s length rate
  • Shared services costs—possibly warranting a study to determine the appropriate profit rate for the services provided
  • Technical or management services arrangements and payments for intellectual properties—possibly requiring appropriate transfer pricing documents supporting the tax deductibility of such payments

Read a September 2012 report [PDF 472 KB] prepared by the KPMG member firm in Nigeria: Transfer Pricing Update


For additional background information on the proposed transfer pricing regulations, read a May 2012 report [PDF 2 MB] prepared by the KPMG member firm in Nigeria: Transfer Pricing – a rising dawn in Nigeria




Contact a tax professional with KPMG's Global Transfer Pricing Services.




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