The regulations on Transfer Pricing (TP) recently introduced into the country would boost the federal government’s revenue generation drive, officials of PricewaterhouseCoopers (PwC) have said.
TP refers to the setting, analysis, documentation, and adjustment of charges made between related parties for goods, services, or use of property (including intangible property).
Tax and Corporate Advisory Leader, PwC Nigeria, Mr. Taiwo Oyedele, said this while addressing a forum on the new transfer pricing regulation, organised by his firm in Lagos.
According to Oyedele, if the right amount of tax is levied on businesses, especially multinational, it would enhance business operations in Nigeria and add value to the economy.
He explained that the new TP regulations released in October 2012, based on the general anti-avoidance provisions in the various tax laws required related party transactions to be conducted at ‘arm’s length’.
Oyedele added: “For example, a company with an accounting year end date of 31st December 2012 will be required to have its TP documentation in place for the accounting year commencing 1st January 2013 for returns to be filed by June 2014
“However, the time to act is now, to ensure that the appropriate TP is reflected from the first day of the new accounting year. It is important to start to collate the correct supporting documentation now rather than making year-end adjustments which may be difficult to defend.”
He pointed out that TP regulations are “applicable only to transactions between connected taxable persons which include individuals and entities who share common control, management or shareholders, or individual and entities who participate directly or indirectly in the management, control or capital of one
Speaking on TP services offered by PwC, Oladele said: “Our network consists of more than 100 partners and 1,600 dedicated transfer pricing professionals based in over 70 countries. Our combined experience across our member firms enables us to develop innovative approaches for an expansive list of clients from high growth entrepreneurship to established market leaders, in a wide range of industries.