Intra-group Financing In Nigeria: Pertinent Points To Note

Introduction to Intra-group Financing

Intra-group financing arrangement, particularly interest-bearing loan arrangements, have long been one of the foremost tax planning strategies adopted by multinational enterprises to shift profits from one jurisdiction to another. As a result, tax authorities globally tend to scrutinize these arrangements under transfer pricing rules to ensure that the terms of these transactions are at arm’s length. Some examples of intra-group financing arrangements include transactions like loans, cash pooling, and guarantees involving connected persons.

In recent times, the Nigeria Revenue Service has also begun to scrutinize intra-group financing arrangements more keenly, going beyond merely considering whether taxpayers have complied with the withholding tax obligations that accompany such arrangements and interrogating the arm’s length nature of the interest rates to raising critical questions regarding the accurate characterization of such