The Federal Inland Revenue Service (FIRS), in the exercise of powers conferred on it by Section 61 of the Federal Inland Revenue Service (Establishment) Act No.13 of 2007, has updated the Income Tax (Transfer Pricing) Regulations, 2012 (Old Regulations). The revised Transfer Pricing (TP) Regulations (the Revised Regulations) came into effect from March 2018 and the updates are first to be made to the TP Regulations in Nigeria since its introduction in 2012.
The Regulations aim at increased compliance with the TP requirements and are in line with the TP Guidelines for Multinational Enterprises and Tax Administrations published by the Organisation for Economic Corporation and Development (OECD) in July 2017.
The main highlights of the changes in the revised TP Regulations are as follows:
Old Regulations | Revised Regulations | |
Scope of application | The Regulations gave effect to the provisions of the following legislation as they relate to connected transactions:
| The scope of the Regulations has been expanded to give effect to the provisions of the following legislation:
|
Materiality threshold for applying for Advance Pricing Agreement (APA”) | The materiality threshold for APA was set at ₦250m | There is no materiality threshold |
Materiality threshold for maintaining contemporaneous documentation | There was no materiality threshold | The threshold for maintaining contemporaneous documentation is set at ₦300m |
Documents required to be filed with FIRS | The following documents were required to be filed on annual basis:
| A Group Masterfile is required to be filed with FIRS in addition to the documents under the Old Regulations |
Penalty for failure to file TP Declaration form within the stipulated time |
| Penalty has been increased as follows:
|
Penalties for failure to file(1) TP Disclosure Form, or (2) TP Documentation within the stipulated time | ₦25,000 for the first month of default and ₦5,000 for every month the failure continues | Penalty has been amended as shown below:
|
Penalties for making an incorrect disclosure in the TP Disclosure form submitted to FIRS | None | ₦10m or 1% of the value of controlled transactions incorrectly disclosed, whichever is higher, shall apply. |
Failure to provide FIRS with any information or document required within the time specified in a notice issued to the taxpayer by FIRS | None |
|
Failure to submit updated TP Declaration form | None | · ₦25,000 for every day the failure continues |