The Federal Inland Revenue Service (FIRS) has stated that the new transfer pricing regulations which took effect in March 2018, will contribute to the growth of the Nigerian economy.
The revenue agency specifically said the new regulation which was a fallout of the recommendations of the Organisation for Economic Cooperation and Development (OECD) and covers grey areas found in the 2012 version, would serve as a game-changer for Nigeria and Africa.
Speaking in Lagos at a stakeholders’ knowledge sharing session organised by Ernst & Young Nigeria (EY), with the topic: “The New Transfer Pricing Regulations 2018 and the Implications for Taxpayers,” the Director, International Tax Department, FIRS, Mr. Mathew
Gbonjubola, noted that the new regulation would drive compliance.
Gbonjubola said: “This new regulation is a game-changer because now it’s going to drive compliance very well; it is addressing our pressing issues – issues that are pertaining to Africa and particularly to Nigeria.
“That will drive our economy. It’s a game-changer because it’s providing clarity to taxpayers, which is very important.
“A lot of the non-compliance are arising as a result of lack of understanding, our lack of clarity in the rule. This has now been brought to the fore and now people cannot have reason not to comply.
“And also, for those who would not be complying, there are also penalties that apply for that.”
Gbonjubola also explained that the FIRS discovered some loopholes in the old regulation and was worried that the process could be manipulated to make profit from one country to the other by either over-pricing or under-pricing, hence the review.
He added: “In 2012, the federal government came up with a transfer pricing regulation which came into operation in 2013, and we have operated that for about four years and spotted a number of flaws – some of the gaps that were not envisaged while the initial drafting was done.
“For example, certain issues like how to deal with intragroup issues, how to deal with commodities like crude oil. So, we needed to address those gaps.”
On his part, Team Lead, Transfer Pricing, EY Nigeria, Mr. Temitpe Oni, said the new draft was more comprehensive and clearer, pointing out that many of the transfer pricing-related recommendations by the OECD were captured.
He said: “So we have codes along that line covered in the new regulations; also, they are driving compliance because we are of the opinion that, many taxpayers have not been complying with the provisions of the old transfer pricing regulation.”
He added that the knowledge sharing session was held to sensitise stakeholders on the new regulations and also to prove EY’s commitment in building a better working world for businesses to thrive.