Since the introduction of
Transfer Pricing (TP) Regulations in Nigeria in 2012, the Federal
Inland Revenue Service (FIRS) has not only focused on driving
compliance with the TP Regulations but has also embarked on the
audit of taxpayers' Related Party Transactions (RPTs) to
confirm compliance with the arm's length principle.
In recent years, the chances of a taxpayer being selected for a
TP audit has increased significantly due to the increased revenue
drive by the government. Revenue generation through TP is
especially attractive as the additional tax liabilities which may
crystalize from a Transfer Pricing audits are typically
significant.
With the introduction of the
Revised Nigeria TP Regulations in 2018, the FIRS has commenced
the imposition of administrative penalties to increase revenue
generation and drive compliance. It is however not farfetched that
the FIRS might sooner rather than later redirect their efforts to
conducting TP audits in order to meet
