Transfer Pricing Compliance and Documentation Requirements under the Finance Act 2019.

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Transfer pricing has become an increasingly important issue in international taxation, including in Nigeria. To address concerns related to base erosion and profit shifting (BEPS), the Nigerian government has taken steps to align its transfer pricing regulations with global standards. The Finance Act 2019 introduced significant changes in this regard, affecting how multinational corporations operating in Nigeria handle transfer pricing compliance and documentation. In this article, we will explore the key provisions of the Finance Act 2019 concerning transfer pricing and the implications for businesses.

1. Definition of Related Persons: The Finance Act 2019 broadened the definition of related persons for transfer pricing purposes. It includes not only affiliates or subsidiaries but also entities in which there is significant influence or control over business decisions. This change aims to prevent profit shifting through non-arm’s length transactions.

2. Documentation Requirements: One of the most significant changes introduced by the Act is the requirement for taxpayers to maintain and submit transfer pricing documentation. Businesses engaged in controlled transactions exceeding ₦300 million in value are now obliged to prepare and maintain detailed transfer pricing documentation. This documentation must be filed with the tax authorities upon request.

3. Penalties for Non-Compliance: The Finance Act 2019 introduced stringent penalties for non-compliance with transfer pricing regulations. Failure to maintain and provide transfer pricing documentation upon request can result in substantial penalties. Businesses should take this requirement seriously to avoid financial consequences and reputational damage.

4. Transfer Pricing Methods: The Act provides guidelines on acceptable transfer pricing methods, including the Comparable Uncontrolled Price (CUP) method, the Resale Price Method (RPM), and the Transactional Net Margin Method (TNMM). Businesses must select the most appropriate method based on the nature of their transactions.

5. Advance Pricing Agreements (APAs): The Finance Act 2019 introduced the concept of Advance Pricing Agreements (APAs) in Nigeria. This allows taxpayers to seek agreement from the tax authorities on the pricing of their controlled transactions in advance. APAs provide certainty and reduce the risk of disputes.

6. Transfer Pricing Audits: The Act empowers the tax authorities to carry out transfer pricing audits. Taxpayers must cooperate fully with these audits, providing access to relevant documentation and information.

7. Mutual Agreement Procedure (MAP): In cases of disputes related to transfer pricing, the Act allows taxpayers to seek resolution through the Mutual Agreement Procedure (MAP) provided under Nigeria’s tax treaties with other countries. This mechanism can help prevent double taxation and mitigate disputes.


The Finance Act 2019’s transfer pricing provisions underscore Nigeria’s commitment to international best practices in taxation and the prevention of profit shifting. Multinational corporations operating in Nigeria should be proactive in understanding and complying with these regulations. Compliance with the Finance Act 2019’s transfer pricing requirements is essential not only to avoid penalties but also to foster a transparent and equitable tax environment in Nigeria. By embracing responsible transfer pricing practices, businesses can contribute to a fair and sustainable tax system while safeguarding their interests in the Nigerian market.

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.