Regulation 15 of the Nigerian transfer pricing regulations provides for a transfer pricing safe harbor. A safe harbor is a statutory provision that relieves a given category of taxpayers or transactions from specific obligations otherwise imposed by the tax legislation, by providing a more straightforward option. .

In the case of Nigeria the regulations  provide that a “connected” taxable person would be exempt from the transfer pricing documentation requirements if the transactions with related entities are priced in accordance with the requirements of Nigerian statutory provisions, or if the prices of connected transactions have been approved by other government regulatory agencies or authorities established under Nigerian law, and deemed by the tax administration to be at arm’s length.

Other regulatory approvals in the transfer pricing regulations include those issued by the National Office for Technology Acquisition and Promotion (NOTAP), the Department of Petroleum Resources (DPR), the Nigerian National Petroleum Corp. (NNPC).

However in Nigeria the safe harbor provisions have in practice not provided as much reduction in compliance costs for taxpayers as might be expected. The onus is still on the taxpayer to demonstrate that transfer prices are at arm’s length. In practice taxpayers still need to perform a full transfer pricing study. This may also be necessary to satisfy the foreign tax authorities dealing with the tax affairs of the other party to the transaction. Taxpayers with related party transactions therefore still need to prepare adequate documentation to make sure that the regulations have been complied with.