The Nigeria Transfer Pricing Regulations (NTPR) 2018 includes various compliance obligations for taxpayers, one of which is the filing of annual statutory Transfer Pricing (TP) returns with the Federal Inland Revenue Service (FIRS or the Service).

On 18 February 2024, the FIRS issued a Public Notice to all taxpayers and the general public on the migration of the annual filing of TP returns and Country-by- Country Reporting (CbCR) notification forms from the electronic TP platform (e-TP Plat) to the TaxPro Max platform (the Platform). Additionally, the Service granted existing and potential taxpayers up to 30 June 2024 to complete the filing of any outstanding TP returns and CbCR notifications on the Platform.

This article highlights the history of TP filings in Nigeria, our observations from the use of the Platform and potential benefits and challenges of migrating to the Platform.

TP Filing in Nigeria

The NTPR requires taxpayers with related parties and Related Party Transactions (RPTs) to file annual TP statutory returns (TP declaration and disclosure forms) on or before six (6) months after the end of its accounting year or eighteen (18) months after the date of incorporation, whichever is earlier. Also, Constituent Entities which are part of a Multinational Enterprise (MNE) group, with a consolidated revenue of €750 million or ₦160 billion in the preceding accounting year are required to file a CbCR notification form not later than the last day of the constituent entities' financial year end.

Also, the parent company of the MNE group is expected to submit or appoint a surrogate to submit a CbC Report on behalf of the group, not later than twelve (12) months after the last day of the reporting accounting year of the MNE group. The NTPR and the CbCR Regulations introduced stringent administrative penalties on taxpayers who fail to comply with the filing obligations. Prior to 2021, TP filings were done through the use of hard copies of the TP forms, which were submitted physically at the FIRS' office, accompanied by the required supporting documents including the Audited Financial Statements (AFS), tax computation, and self assessment forms. Copies of the filed returns were stamped and acknowledged, while the FIRS kept the original documents. This resulted in the FIRS having voluminous hard copy documents to review, analyse and save. In a bid to improve efficiency and address the challenges of hard copy fillings, the FIRS moved to electronic filing on the e-TP Plat, which was formally launched in March 2020.

The FIRS also introduced the Platform for tax filings in June 2021, in order to simplify tax compliance and digitalize the tax administration process in Nigeria.

With the issue of the Public Notice, taxpayers are expected to use the Platform for TP filings effective immediately.

Benefits of Migrating TP Filings to the Platform

  1. Granting of a waiver and exemption from penalties: The FIRS through the Public Notice has granted taxpayers a waiver on administrative penalties, where they fulfil all outstanding TP returns and CbCR notifications filing obligations on the Platform by 30 June 2024. This is a great opportunity for taxpayers who had been discouraged by the huge administrative penalties, to regularise their TP compliance status. Consequently, this development is expected to bring companies not currently captured within the tax net into the net.
  2. Centralised system for tax and TP compliance: The Platform provides a centralized system for tax and TP filings, allowing taxpayers and the FIRS to see at a glance the tax and TP compliance status and providing access to required tax and TP documents especially during audits, thereby improving the management of taxpayer information.
  3. Convenience and ease of compliance: One of the anticipated benefits of utilizing the Platform for TP filings is the convenience the Platform is expected to offer taxpayers. The e-TP Plat required taxpayers to upload supporting documents alongside the TP declaration and disclosure forms. However, with tax filings being done on the Platform, it is expected that the supporting documents would be readily available on the Platform.
  4. Ease of completion: The e-TP Plat required taxpayers to upload financial information from taxpayers' AFS (income statement and statement of financial position). However, the Platform removes this requirement, making it easy for taxpayers to focus on filling the TP forms. Also, there is no significant difference between the information required to complete the TP forms on the e-TP Plat and the Platform, thereby making it easy for taxpayers to navigate and complete their TP filings as taxpayers are familiar with the required information. Some of the information includes the name of the reporting entity, business location, company's ownership, list of the company's stakeholders, value of controlled transactions with related parties in Nigeria and overseas, etc.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.