ARTICLE
15 January 2025

FIRS Issues Guidelines On Advance Pricing Agreements In Nigeria

KN
KPMG Nigeria

Contributor

KPMG Nigeria is a member firm of KPMG International. We provide Audit, Advisory and Tax & Regulatory services, across various industries, to national and multinational companies. Our purpose is to inspire confidence and empower change. We have a relentless focus on delivering quality and excellent service to clients. We, therefore, provide insights and innovative ideas to clients to help them achieve their corporate objectives.
In the evolving global tax landscape, related-party transactions and transfer pricing (TP) have become pivotal issues for tax authorities worldwide. Recognizing the complexities and potential disputes
Nigeria Tax

In the evolving global tax landscape, related-party transactions and transfer pricing (TP) have become pivotal issues for tax authorities worldwide. Recognizing the complexities and potential disputes surroundingTP, the Federal Inland Revenue Service (FIRS) recently introduced comprehensive Guidelines on Advance Pricing Agreements (APAs) through Information Circular No. 2024/006, which was published on 27 November 2024 (hereafter referred to as "the Guidelines" or "the Circular").

The Guidelines have an effective date of 1 January 2025 and provide a structured framework for taxpayers to negotiate predetermined TP methodologies with the FIRS that would govern their proposed controlled transactions, thereby reducing uncertainties and fostering trust.

The major significance of the Guidelines is the mitigation of the risks of double taxation and prolonged TP disputes – which typically lead to significant, alleged additional tax liabilities – for multinational enterprises (MNEs) operating in Nigeria. The Guidelines also aim to promote Nigeria's tax compliance standards in alignment with global best practices, to ensure that related-party transactions involving entities that have a taxable presence in Nigeria adhere to the Arm's Length Principle.

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