Recent developments in Nigeria including the impact of the
global COVID-19 pandemic on the economy, the urgent need for the
Federal Government (FG) to raise more tax revenue to help fund the
significant budget deficit and developments in the tax and Transfer
Pricing (TP) space have contributed in making TP one of the
riskiest areas in taxation in Nigeria.
Specifically, the release of the maiden TP judgment in Nigeria
between Prime Plastichem Nigeria Limited (PPNL) and the Federal
Inland Revenue Service (FIRS) [which resulted in a ₦1.7
billion additional tax liability], management changes within the
FIRS International Tax Division (ITD), introduction of the Finance
Act 2019 and the Significant Economic Order (SEP) 2020 were
significant TP developments with implications for taxpayers. The
negative impact of the pandemic on the economy also resulted in
taxpayers earning abnormal returns, which could trigger TP
audits.
