Ernst & Young Nigeria (EY) is taking up the challenge to sensitise industry stakeholders, clients and non-clients on the new transfer pricing regulations and the key changes brought about by the policy.

The move was on the back of the recently released income tax (Transfer Pricing) regulations, 2018 by the Federal Inland Revenue Service (FIRS).

The new regulations were the first to be made to the Transfer Pricing regulations since its introduction in August 2012.

The new Regulations replaced the Income Tax (Transfer Pricing) Regulations, 2012 (old Regulations) and shall apply to financial years beginning after 12 March 2018.

Speaking on the primary objective, EY Head of Tax Services, Akinbiyi Abudu, noted that the knowledge sharing session is aimed at addressing all the enquiries pertaining to the 2018 Transfer Pricing regulations and the implications for taxpayers.

The session would hold in Lagos next Wednesday.

According to Abudu, the introduction of the new regulations represents a significant step taken by the FIRS towards ensuring increased compliance and implementation of the arm’s length principle in a manner consistent with the Organisation for Economic Co-operation and Development TP Guidelines for Multinational Enterprises and Tax Administrations and the United Nations Practical Manual on Transfer Pricing for Developing Countries, both updated in 2017.

“The new Regulations essentially reflect some of the main transfer pricing (TP) related changes introduced to the 2017 editions of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD TPG) and United Nations Practical Manual on Transfer Pricing for Developing Countries (UN TP Manual)”.

On the likely implications of the new regulations, Abudu states that significant penalties for non-compliance and other provisions which are far-reaching have been included in the new Regulations, hence companies are encouraged to take the necessary steps to proactively examine the potential gaps that may arise from full implementation of the new Regulations.

Continuing, Akinbiyi said: “Considering the magnitude of the penalties that could arise in the event of default in filing after the due date or incorrect disclosures, it is important that companies ensure they not only prepare and file the required documents, but also do so accurately to avoid imposition of penalties.”