Ernst & Young
Ernst & Young has advised both local and international firms operating in the country to implement transfer pricing rules so as grow their businesses.
Transfer pricing is an international taxation technique, which refers to the setting, analysis, documenting and adjustment of charges made between related parties for goods, services, or use of property (including intangible property). It is a valid business practice for associated companies in the pricing of inter-related sales within a group.
Senior Manager, International Tax Services, Ernst & Young, Mr. Josh Bamfo said this at a workshop organised by the firm in Lagos. He expressed readiness of his company to partner companies in Nigeria that may have challenges with the issue of transfer pricing in their businesses.
According to Bamfo, poorly or partially implemented transfer pricing regulations may lead to materially misstated financial statements; increased tax liabilities and tax penalties.
Bamfo said if not properly handled, transfer pricing issues could bring about image crisis for an organisation, while the company would be faced with sanctions from tax authorities and other agencies of government.
He added: “As with any business system, it is very difficult to achieve intended results unless explicit processes and controls are defined and implemented. Furthermore, any business systems featuring multiple handoffs and without a single point of accountability is vulnerable to breakdown.”
On his part, Director, Large Taxpayers Department, Federal Inland Revenue Service (FIRS), Mr. Ajayi Bamidele, advised companies to take issues of transfer pricing seriously so as to avoid mistakes that would affect their businesses.