This article was published in The Guardian Newspaper on 12 November 2020. Below is an excerpt from the article.
The Federal Government of Nigeria has recently intensified efforts to shore up non-oil revenue in a bid to ease budgetary pressures. Non-oil tax revenue seems to be one of the “low-hanging fruits” and consequently, the Federal Inland Revenue Service (FIRS) has a mandate to explore options available to optimise tax revenue (under its administration), with a key focus on Transfer Pricing (TP).
The Income Tax (Transfer Pricing) Regulations, 2018 (“TP Regulations”) among other things, provides guidance on TP compliance obligations and prescribes penalties for non-compliance. The FIRS has
been aggressive in enforcing the penalty provisions in the TP Regulations and some taxpayers have been penalised for various infractions. However, the revenue from administrative penalties is expected to reduce significantly over the next two years as a result of increased awareness of taxpayers with respect to their TP obligations.
Consequently, we expect the FIRS to redirect attention to TP audits in ensuring adherence to the TP Regulations.