Business
Firm Tasks Stakeholders On New FIRS Pricing Method
Nigerian multinational and group structured companies have been urged to wake up to the reality of the new transfer pricing regulations issued by the Federal Inland Revenue Service.
A statement made available to our correspondent last Thursday by Pedabo, the Nigerian member firm of Morrison International, quoted a Director of the Federal Inland Revenue Service (FIRS), Mr. Bamidele Ajayi, as saying that the new transfer pricing regulations were in line with international best practices.
He explained that the regulations were aimed at fighting tax evasion through over or under invoicing, provide level playing field between multinational and local enterprises, and generally ensure that the taxes paid in Nigeria were appropriate for the economic activities performed in the country.
Ajayi explained that the opportunity for entering into an advance pricing agreement with taxpayers was based on the desire of FIRS to minimise potential disputes that could arise from transfer pricing.
While speaking on his country’s experience, a transfer pricing expert from S. C. Vasudeva & Co, India, Mr. Sachin Vasudeva, noted the need for Nigeria to learn from some of the pitfalls suffered by India in the implementation of its transfer pricing.
“Some suggestions included the need to clearly define the term: ‘intangibles” as well as the need to include a limitation clause that excludes local group companies from filing transfer pricing returns until they attain a set threshold of inter-company transactions,” he said.
These corrections, Vasudeva said, would help in ensuring that the compliance costs of small companies were not unduly increased, while also ensuring that the potential for litigations are minimised.
He, however, said a number of litigations were likely to be witnessed in the cause of implementing the new rules in Nigeria, as had been the case in India.
Vasudeva, therefore, implored affected companies to ensure that they utilised the services of competent professionals to provide them with the needed guidance and documentation necessary to defend the pricing of their related party transactions.