Transfer Pricing and Business Restructuring: Navigating Transfer Pricing Implications in Nigeria.


In the dynamic landscape of global business, companies often undergo various restructuring initiatives to adapt to changing market conditions and optimize their operations. While business restructuring can offer strategic advantages, it also raises significant transfer pricing considerations. For Nigerian businesses engaging in restructuring activities, understanding and addressing transfer pricing implications are essential to ensure compliance and avoid potential disputes. In this article, we will delve into the complexities of transfer pricing and business restructuring and provide insights for Nigerian companies.

Business Restructuring and Transfer Pricing:

Business restructuring encompasses a range of activities, such as mergers, acquisitions, divestitures, and changes in business models. These activities can impact the allocation of functions, risks, and assets among related entities within a multinational group. As a result, transfer pricing implications arise when determining the appropriate prices for transactions resulting from the restructuring.

In Nigeria, ensuring that transfer pricing remains consistent with the arm’s length principle throughout and after a restructuring is crucial.

Key Transfer Pricing Implications:

Nigerian companies involved in business restructuring must consider the following transfer pricing implications:

  • Functional Analysis: Assess the changed functions, assets, and risks of entities post-restructuring. Understand how these changes impact the allocation of profits among related entities.
  • Comparability Analysis: Review comparables to ensure they remain relevant post-restructuring, as the business’s profile may have changed.
  • Intangible Assets: If the restructuring involves the transfer of intangible assets, careful valuation and pricing of these assets are critical.
  • Transfer Pricing Methods: Re-evaluate the transfer pricing methods used and choose the most appropriate method considering the new business structure.
  • Documentation Update: Ensure that transfer pricing documentation is updated to reflect the changes resulting from the restructuring.

Challenges and Mitigation Strategies:

Navigating transfer pricing implications in business restructuring comes with challenges:

  • Data Availability: Finding comparable data for post-restructuring scenarios may be challenging, particularly if the business’s profile has significantly changed.
  • Functional Analysis Complexity: Assessing the impact of restructuring on functions, risks, and assets requires a comprehensive understanding of the business’s operations.

To address these challenges, Nigerian companies can seek professional assistance from accounting and tax experts with expertise in transfer pricing and business restructuring.


Transfer pricing implications are a critical consideration for Nigerian companies undergoing business restructuring. By carefully assessing functional changes, performing robust comparability analyses, updating documentation, and seeking expert guidance, businesses can ensure compliance with transfer pricing regulations and minimize the risk of disputes.

For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, You can also reach us via WhatsApp at +2348038460036.