As envisaged at the beginning of the year, 2022 has witnessed a
significant increase in Transfer Pricing (TP) audits. In recent
months, there has been a significant drive by the Federal Inland
Revenue Service (FIRS) to generate more tax revenues to fund
government expenditure. The FIRS has continuously selected more
clients for audits, issuing correspondence to taxpayers to initiate
the audit process or revive old TP audits with the aim of speedily
concluding them.
As you may be aware, TP is a highly specialised discipline based
on the Arm's Length Principle (ALP), which can be applied and
interpreted in various ways. It therefore comes as no surprise that
the TP audit process can be contentious and may result in
significant additional tax liabilities for taxpayers. This has led
to a lot of controversy between taxpayers and the FIRS during the
audit process in a bid to conclude the TP audit.
