TRANSFER PRICING RULES IN NIGERIA THE INCOME TAX (TRANSFER PRICING) REGULATIONS NO 1, 2012 (Under Section 17 Personal Income Tax Cap P8 Act LFN 2004, Section 22 Companies Income Tax Act CAP C21 LFN 2004 (updated to 2007), and Section 15 Petroleum Profits Tax Act CAP P13, LFN 2004) This Regulation is made by the Federal Inland Revenue Service pursuant to section 61 of the Federal Inland Revenue Service (Establishment) Act 2007 for the Transfer Pricing of Connected Taxable Persons. Transfer Pricing Regulation, a Presentation by Ajayi Bamidele the Director, Large Taxpayers’ Department, March, 2012PART I—PRELIMINARY Citation This Regulation may be cited as the Income Tax (Transfer Pricing) Regulation No. 1, 2012and shall come into force in 2012 and replace any arrangement in place with any company before the commencement of this Regulation. Transfer Pricing Regulation, a Presentation by the Director, Large Taxpayers’ Department, March, 2012Scope of the Regulation This Regulation shall apply to transactions between connected persons carried on in a manner consistent with the arm’s length principle and includes; i. Transactions between a Permanent Establishment (PE) and its head office or other related branches. Branches are treated as separate entities ii. Sale and purchase of goods and services iii. Sales, Purchase or Lease of tangible assets iv. Transfer, Purchase or use of intangible assets v. Provision of Services vi. Lending or borrowing of money vii.Manufacturing arrangement viii.Any transaction which may affect profit and loss or any other matter incidental to the foregoingObjectives of this Regulation include: a. To give the Country the opportunity to have a fair share of the profit of connected taxable persons’ transactions and dealings. b. To provide the tools to fight artificial transactions and shifting of profits out of their jurisdiction by connected taxable persons. c. To reduce the risk of economic double taxation. d. Provide a level playing field between connected taxable persons and independent Enterprises doing business within the Country. e. To provide connected taxable persons with certainty of transfer pricing treatment in the Country.PART II—COMPARABILITY FACTORS, TAXABLE PERSONS, UNITED NATIONS AND OECD DOCUMENTS Comparability factors 1. For the purpose of determining whether a transaction (s) is consistent with the arm’s length principle, the Service shall determine whether such a transaction is comparable with a similar or identical transaction by an unconnected taxable person. 2. In determining whether two or more transactions are comparable the following factors shall be considered to the extent that they are economically relevant to the facts and circumstances of the transactions— (a) The characteristics of the goods, property or services transferred or supplied; Transfer Pricing Regulation, a Presentation by Ajayi Bamidele the Director, Large Taxpayers’ Department, March, 2012b) The functions undertaken by the person entering into the transaction taking into account assets used and risks assumed; (c) The contractual terms of the transactions; (d) The economic circumstances in which the transactions take place; and (e) The business strategies pursued by the connected taxable persons to the controlled transaction. Transfer Pricing Regulation, a Presentation by the Director, Large Taxpayers’ Department, March, 2012Connected Taxable Person ‘Connected Taxable Person’ includes, without limiting the generality hereof, persons, individuals, entities, companies, partnerships, joint ventures, trusts or associations (collectively referred to as ‘persons’ in these Regulations) and including the persons referred to in: (i) Sections 13(2)(d), 18(2)(b) and 22(2)(b) of the 1990 CITA; (ii) Section 15(2) of the PPTA; (iii) Section 17(3)(b) of the 1993 PITA; (iv) ‘Article 9’ of the OECD Model Tax Convention (v) ‘Associated enterprise’ of the OECD Guidelines
Posted on: Tue, 13 Aug 2013 21:30:20 +0000
Trending Topics
Recently Viewed Topics
© 2015