Nigeria has announced new Transfer Pricing Regulations on October 22, 2012. This will be applicable retroactively to August 2, 2012. The TP Regulations provide that all transactions between connected parties should be at arm’s length. Taxpayers are required to maintain transfer pricing documentation and to file a transfer pricing declaration form along with the annual tax return.

The transfer pricing methods to be applied in determining the arm’s length price include:    

  • Comparable uncontrolled price method.
  • The resale price method.
  • The cost plus method.
  • The transactional net margin method.

The transactional profit split method. Any other method is permissible where the taxpayer can show that none of the listed methods may be reasonably applied to the transaction. As regards to an APA taxpayers can enter into an agreement with the Federal Inland Revenue Service establishing the arm’s length price for certain future controlled transactions.