Appraisal of Transfer Pricing in Nigeria and its Effect

Ngozi Asomadu

Obafemi Awolowo University Ile-Ife Osun State Nigeria

Transfer pricing can be regarded as an economic and legal tool used by business entities for the optimization of their tax burden. This has become a continuous dilemma in tax revenue collection in the world, and Nigeria is not excluded. The urge to ensure that the tax planning activities of multinationals operating in Nigeria do not escape the country's domestic tax base led to the enactment of the Transfer Pricing Regulations, 2018, in Nigeria. In addition, the new Act, known as the Nigeria Tax Act and Nigerian Tax Administration Act 2025 respectively brought about some changes which aid in regulating TP to ensure that multinationals do not evade tax payment in Nigeria. This paper is aimed at examining the effect of the minimum tax as contained in the old Act and introduction of the Minimum Effective Tax Rate in the new Act on multinational companies. This paper further examined the effect of transfer pricing in Nigeria and the position of law as regards a consistent transfer pricing method as decided in the case of Prime Plastichem Nigeria Limited. The methodology adopted in this work is doctrinal, wherein primary and secondary sources of material were utilized. By way of conclusion, this paper recommends that while the tax authorities need to train and equip their personnel with necessary technology for effective tax administration which will aid in meeting international best practices, it is also paramount that these standards are tailored to fit Nigeria’s unique economic and business environment

Article link: https://www.asianinstituteofresearch.org/lhqrarchives/appraisal-of-transfer-pricing-in-nigeria-and-its-effect-