The recent increased focus on tax revenue as a complement to oil revenue is becoming evident from successive budgets of the Nigerian government. The Federal Government of Nigeria (FGN) has strived to retain tax rates, except for the recent increase in value-added tax (VAT) rate, which was long overdue, to balance the economic downturn. This means that efforts of government revenue agencies have been geared towards generating more tax revenues without creating additional burden on compliant taxpayers. This article examines some of these efforts with specific reference to the transfer pricing (TP) landscape in Nigeria.
Facilitation of voluntary and easy compliance by taxpayers is globally recognized as an effective tool to widen the tax net and increase tax revenues. This is especially true for developing countries. This approach has encouraged taxpayers to pay their taxes accurately, timely and voluntarily. The Nigerian government has invested in this approach through tax amnesty programs such as the Voluntary Assets and Income Declaration Scheme (VAIDS), the success of which cannot be over-emphasized. The annual enactment of Finance Acts, which provides clarity to ambiguous provisions of the tax laws, mirrors current economic realities and provides incentives to taxpayers, is another laudable effort. The Federal Inland Revenue Service (FIRS), being the Federal tax agency, has also complemented these efforts with frequent interactive sessions with taxpayers.