Revised Transfer Pricing (TP) Regulation


We would like to draw your attention to the Revised Income Tax Transfer pricing Regulations 2018 recently released by the Federal Inland Revenue Service (FIRS). The new regulation has repealed the Income Tax (Transfer Pricing) Regulation No. 1 of 2012 and has an effective date of 12 March, 2018.


The Revised Regulation requires that:

  1. The tax paper fills an Update Transfer Pricing Declaration Form in any of the following circumstance:
  • where there is a merger of the taxpayer or its parent company;
  • where there is an acquisition of up to 20% of the taxpayer or its parent company by

               previously unrelated entity;

  • where there is any other change in the structure or arrangement of the taxpayer; and
  • where there is an appointment or retirement of a director of a connected person.
  1. The TP disclosure form is also to be completed annually.
  2. The TP documentation should now involve connected persons preparing a master file, local

         file and have a detailed list of information and analysis.


  1. Unlike the 2012 Regulations, the Revised Transfer Pricing Regulations has introduced

         penalties for TP related offences. Please find below highlights of the offences and penalties.

 TP Offense                                 Penalty

i.     Failure to file TP declaration                N10 million in the first instance and N10,000 for

         within the specified period of             every day the failure continues.

         months after financial year end


ii.     Failure to file updated TP                    N25,000 for each day in which failure continues.

         declaration/notification about

         changes in directors.


iii.     Failure to file TP disclosures               The higher of N10 million or 1% of the value of the

         within the specific period.                  controlled transactions not disclosed, and N10,000

                                                                every day the failure continues.


  1. Incorrect disclosure of                        The higher of N10 million or 1% of the value of the

        transaction                                         controlled transaction incorrectly disclosed.


v       Failure to file TP                                 The higher of N10 million or 1% of the value of the

         documentation upon request.              controlled transaction not disclosed and N10,000

                                                                  every day the failure continues.


vi      Failure to furnish information                1% of the value of each controlled transaction for

          or document within the                        which the information or documentation was

           specified period                                  required and N10,000 every day the failure continues.



  1. Implications of the new regulation

The revised Transfer Pricing Regulations come with stiffer TP regime in Nigeria with the introduction of penalties. In the light of these revisions, there is need for taxpayers to brace up for the new challenges that come with the revision. We therefore encourage you to take the following steps:


  1. Review your related party transactions to ensure full compliance with the arm’s length

         principle and documentation requirement;


  1. Have your company’s transfer pricing documentation in place;


  1. Put in place machinery to ensure all TP filings (TP declaration and disclosure) are done

         annually and on time.


  1. Ensure that your financial statements are audited on time as a copy of the audited

financial statements is required to be filed along with the Transfer Pricing returns. A TP returns not filed within 6 months after the accounting year end will attract penalty of N10 million in the first instance and N10,000 for every day the failure continues.


For further enquiry on the revised TP regulation. Please contact our

Tax Partner: Mr. Mark Ariemuduigho


Mobile Phone: +234 802 310 6422

Senior Manager Tax: Mrs. Oyinkansola Fuwape


Mobile Phone: +234 802 312 4267



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