To achieve its objective, the federal revenue service is willing to work with businesses, communities and multinationals for best results.
This was according to the Service’s executive chairman, Mr. Kabir Musa who stressed that “Nigeria is not going back on the implementation of the TP regulations” because of its importance towards the success of the government’s Vision 20/20/20 project.
“We are not here to discuss whether there will be Transfer Pricing or not because there is going to be Transfer Pricing. We are not even going to discuss when to start implementation because we have agreed that it will start at the beginning of this year,” Mr. Mashi said.
We are here to talk to ourselves on the progress we have made on the implementation of TP and assure ourselves that we are ready to work with the business community”, he added.
Transfer pricing is a profit allocation method used to attribute a corporation’s net profit or loss before tax to tax jurisdictions.
It refers to the setting, analysis, documentation, and adjustment of charges made between related parties for goods, services, or use of property (including intangible property).
An entry on popular online encyclopedia facility, Wikipedia, described transfer prices as “significant for both taxpayers and tax administrations because they determine in large part the income and expenses, and therefore taxable profits, of associated enterprises in different tax jurisdictions.”
Over 60 governments have adopted transfer pricing rules Mashi, who was represented by the Coordinating Director, Field Operations Group, FOG, Mr. Samuel Ogungbesan, urged the drivers of the TP implementation to work hard to surmount any challenge on the full
realization of the TP.
Mashi said that a lot of effort have been put in the TP project including involving the United Nations and tax professionals bodies like the Institute for Chartered Accountants of Nigeria, ICAN, Association of national Accountants of Nigeria, ANAN,PricewaterhouseCoopers, PwC among others who have assisted to positionTP regulation to it’s present level in Nigeria.
In his paper titled “Transfer Pricing Regulations Development and Implementation in Nigeria”, the Director, Large Tax Department (Oil and Gas) Ajayi Bamidele said TP regulations have come to stay in Nigeria and also urged tax administrators and taxpayers to collaborate an ensure its success by avoiding avoidable disputes.
“The way countries seek to implement Transfer Pricing issues impact on the dispute resolution process and Foreign Direct Investment, hence the issues have to be properly identified and addressed. Nigeria, an integral part of the larger world that wants to be one of the 20 most developed countries by the year 2020 cannot afford to be left behind
in tax development.
“In this dispensation that cross border businesses are on the increase, the share of the apple should not be allowed to be skewed against Nigeria. The international community requires certainty in our tax system to meet one of the canons of taxation and to gain the investors’ confidence in Nigeria, we must work to the direction the TP regulations”, Bamidele said.
The Director also stated that Nigeria must work effectively with the connected taxable persons to realize the dream.
Taiwo Oyedele, Tax Partner at the PwC in his paper on “Tranfer Pricing in Nigeria, Going Forward” stated that Nigeria, is the “China” of Africa, given her population and the potentials of her economy and added thatNigeria must live up to that expectations by developing practicable TP framework.
“To ensure that Nigeria is able to tax on an appropriate basis corresponding to the economic activity deployed by multinational enterprises in Nigeria, including in their transactions and dealings with associated enterprises; to provide Nigerian authorities with the tools to fight tax evasion through over or under pricing of controlled transactions between associated enterprises; to reduce the risk of economic double taxation and provide a level playing field between multinationals and independent enterprises doing businesses in Nigeria”, he said.