In the exercise of its rule-making authority under its enabling legislation,1 the Board of the Federal Inland Revenue Service (“FIRS”) has issued the Income Tax (Transfer Pricing) Regulations 2018 (the “2018 Regulations”). The 2018 Regulations revokes and replaces the Income Tax (Transfer Pricing) Regulations 2012 (the “2012 Regulations”) which hitherto governed regulations over transfer pricing in Nigeria. The 2018 Regulations fairly incorporate the current international trends in the regulation of transfer pricing and is designed to guarantee greater compliance with the transfer pricing regime in Nigeria. This would in turn increase Nigeria’s tax revenue and reduce tax evasion occasioned through the underpricing or overpricing of related party transactions.
This client alert is aimed at highlighting the headline changes introduced by the 2018 Regulations. In line with our tradition of keeping our clients apprised of any changes in the law that may impact on their businesses and commercial undertakings, we have provided summaries of the key changes introduced by the new transfer pricing regime.