Transfer Pricing and Intra-Group Services: Compliance Considerations for Nigeria.

Transfer price: Meaning, types, benefits and more -


In the dynamic landscape of global business, multinational enterprises (MNEs) often rely on the efficient provision of intra-group services to optimize operations and achieve synergies. These services can range from administrative support to shared resources, but their pricing can create transfer pricing challenges that require careful consideration. In Nigeria, as transfer pricing regulations become more stringent, MNEs must navigate compliance considerations related to intra-group services. In this article, we will delve into the complexities of transfer pricing for intra-group services and provide insights tailored to the Nigerian business environment.

Intra-Group Services and Transfer Pricing:

Intra-group services are activities provided by one entity within a multinational group to another entity. The pricing of these services must adhere to the arm’s length principle, ensuring that the charges are equivalent to what unrelated parties would pay for similar services under similar circumstances.

In Nigeria, the Nigerian Transfer Pricing Regulations mandate that transactions between related entities be priced fairly and transparently to prevent tax evasion and base erosion.

Compliance Considerations for Nigerian MNEs:

Nigerian MNEs engaging in intra-group services should be mindful of the following compliance considerations:

  1. Functional and Risk Analysis: Conduct a thorough analysis of the functions performed, assets used, and risks assumed by both the service provider and the recipient. This analysis is essential for determining the appropriate allocation of costs and pricing.
  2. Benefit Test: Ensure that the services provided offer real and measurable benefits to the recipient. The pricing should reflect the value added to the recipient’s operations.
  3. Cost Plus Method: The cost plus method is commonly used for pricing intra-group services. Determine the direct and indirect costs associated with providing the services and apply a reasonable markup.
  4. Benchmarking: Benchmark the intra-group service charges against comparable third-party transactions or publicly available data to ensure consistency with market rates.
  5. Documentation: Maintain comprehensive transfer pricing documentation that outlines the analysis, methodologies, and data used to determine the pricing of intra-group services.

Challenges and Mitigation Strategies:

Nigerian MNEs may face challenges when dealing with intra-group services:

  1. Lack of Comparable Data: Finding comparable third-party transactions for benchmarking intra-group services can be challenging.
  2. Transfer Pricing Audits: Tax authorities may scrutinize intra-group service charges, necessitating thorough documentation and well-substantiated pricing.

To mitigate these challenges, Nigerian MNEs should collaborate with accounting and tax professionals experienced in transfer pricing.

Expert Assistance and Compliance:

Given the technical nature of transfer pricing for intra-group services, seeking expert assistance is advised:

  1. Professional Expertise: Collaborate with accounting and tax experts specializing in transfer pricing to ensure accurate analysis, documentation, and compliance.
  2. Local Market Knowledge: Professionals with knowledge of the Nigerian business environment can provide insights into local market conditions and practices.


Navigating the transfer pricing intricacies of intra-group services is essential for Nigerian MNEs aiming to comply with regulations, demonstrate transparency, and manage risks. By conducting thorough functional analyses, applying appropriate pricing methods, and maintaining comprehensive documentation, Nigerian businesses can ensure that their intra-group services are priced fairly and transparently.

Professional assistance from accounting and tax experts experienced in transfer pricing and the Nigerian business landscape can significantly enhance Nigerian MNEs’ ability to navigate these complexities and align their intra-group service pricing practices with market realities and regulatory requirements.

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.