FIRS Transfer Pricing Declaration (Nigeria)

A FIRS Transfer Pricing Declaration in Nigeria transfers the assignor's rights or interests to the assignee on the terms it specifies.

Under the Income Tax (Transfer Pricing) Regulations 2018, a Nigerian company that enters into controlled transactions with related parties must: (1) price such transactions on an arm's length basis, using one of the five OECD-approved transfer pricing methods (Comparable Uncontrolled Price — CUP, Cost Plus, Resale Minus, Transactional Net Margin Method — TNMM, or Profit Split); (2) maintain contemporaneous transfer pricing documentation (Local File, Master File, and Country-by-Country Report where applicable); and (3) disclose controlled transactions to FIRS annually through the Transfer Pricing Declaration (TP Declaration) filed alongside the annual CIT return.

The Federal Inland Revenue Service (FIRS) issued the FIRS Transfer Pricing Regulations 2018 and the FIRS Information Circular on Transfer Pricing Documentation 2019, which specify the content requirements for Local Files, Master Files, and Country-by-Country Reports (CbCR). Nigeria adopted CbCR with effect from 1 January 2018 for Nigerian MNE groups with consolidated group revenue above NGN 160 billion (approximately USD 400 million), aligned with the OECD BEPS Action 13 threshold. For smaller groups, the Local File and Master File requirements apply where controlled transactions exceed NGN 300 million per year.

Non-compliance with the Transfer Pricing Regulations 2018 — including failure to file the TP Declaration, failure to maintain contemporaneous documentation, or failure to apply the arm's length principle — exposes the taxpayer to FIRS adjustments and penalties under Regulation 31: up to 10% of the value of the mispriced transaction, plus interest at the CBN prime lending rate on any additional tax arising from the adjustment.

The legal framework governing the FIRS Transfer Pricing Declaration (Nigeria) in Nigeria draws on several key statutes and regulatory bodies. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Parties executing a FIRS Transfer Pricing Declaration (Nigeria) in Nigeria should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Companies Income Tax Act (Cap. C21, LFN 2004) sets the foundational requirements.

A FIRS Transfer Pricing Declaration in Nigeria is required annually for all companies that have controlled transactions with related parties exceeding the prescribed thresholds under the Income Tax (Transfer Pricing) Regulations 2018.

A FIRS Transfer Pricing Declaration is required for a Nigerian subsidiary of a foreign multinational group that procures goods, services, financing, or intellectual property from its parent company or other group entities at prices that may differ from what unrelated parties would charge in comparable transactions.

A FIRS Transfer Pricing Declaration is needed for a Nigerian company that charges management fees, service fees, royalties, or technical assistance fees to or from related parties — categories of intercompany charges that FIRS targets most frequently in transfer pricing audits, particularly management fees between Nigerian subsidiaries and foreign parent companies.

A FIRS Transfer Pricing Declaration is required for a Nigerian holding company or intermediate parent that lends funds to Nigerian subsidiaries or group companies at interest rates that may not reflect the arm's length rate for comparable independent loan arrangements — particularly following the Finance Act 2021's introduction of earnings stripping rules limiting interest deductibility.

A FIRS Transfer Pricing Declaration is needed for Nigerian companies in the oil and gas sector regulated by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) under the Petroleum Industry Act 2021 (PIA 2021) that engage in related-party crude oil lifting, gas transfer pricing, and downstream distribution margin arrangements subject to both FIRS TP rules and NUPRC pricing regulations.

A FIRS Transfer Pricing Declaration is required for Nigerian banks regulated by the CBN under BOFIA 2020 that provide intra-group financial services (treasury management, guarantees, letters of credit issuance) to related overseas entities, requiring documentation of the arm's length pricing of these financial transactions under the FIRS TP Regulations 2018.

A Country-by-Country Report (CbCR) notification is required annually for Nigerian entities that are constituent entities of an MNE group with consolidated group revenue above NGN 160 billion, nominating the Reporting Entity for FIRS CbCR submission under the BEPS Action 13 automatic exchange framework.

Parties in Nigeria should prepare a FIRS Transfer Pricing Declaration (Nigeria) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A valid FIRS Transfer Pricing Declaration must contain the following essential elements as prescribed by the Income Tax (Transfer Pricing) Regulations 2018 and FIRS Transfer Pricing Guidelines.

Entity Identification: Full legal name, TIN, CAC RC number, and registered address of the Nigerian entity filing the declaration. Identification of the ultimate parent entity (UPE) of the multinational group, including the UPE's country of incorporation and the group's consolidated group revenue for the relevant fiscal year.

Related Party Schedule: A complete schedule of all related parties with which the Nigerian entity engaged in controlled transactions during the year — including each party's name, country of residence, nature of relationship (parent, subsidiary, sister company, common beneficial owner), and ownership percentage.

Controlled Transactions Summary: For each category of controlled transaction — goods, services, financing, royalties, guarantee fees, management fees, cost-sharing arrangements — a summary table showing: transaction type, value in NGN, counterparty entity and country, and the transfer pricing method applied. The aggregate value of all controlled transactions must be disclosed.

Transfer Pricing Method Selected: Identification of the TP method used for each controlled transaction — Comparable Uncontrolled Price (CUP), Cost Plus, Resale Minus, Transactional Net Margin Method (TNMM), or Profit Split — and the rationale for the method selection in accordance with the OECD Transfer Pricing Guidelines 2022 as adopted by FIRS.

Arm's Length Range: The arm's length range established by the benchmarking analysis, the comparables selected, and the interquartile range of the relevant financial indicator (e.g., operating margin, markup, or net cost plus) demonstrating that the controlled transaction falls within the arm's length range.

Contemporaneous Documentation: Confirmation that the required Local File (entity-specific TP documentation) and Master File (group-level TP documentation) have been prepared and are available for FIRS inspection within 21 days of request under Regulation 17 of the TP Regulations 2018.

CbCR Notification (where applicable): For MNE groups above the NGN 160 billion threshold, identification of the Reporting Entity filing the Country-by-Country Report with FIRS, and confirmation of the FIRS CbCR submission reference number.

Additional compliance elements for a FIRS Transfer Pricing Declaration (Nigeria) used in Nigeria include: Under Nigerian law, the Companies and Allied Matters Act 2020 (CAMA) regulates corporate entities through the Corporate Affairs Commission (CAC). The Labour Act (Cap L1 LFN 2004) and the National Industrial Court of Nigeria (NICN) govern employment disputes. The Nigeria Data Protection Regulation (NDPR) 2019 and the Nigeria Data Protection Commission (NDPC) protect personal data. The Federal Inland Revenue Service (FIRS) administers tax obligations under the Companies Income Tax Act. The Federal High Court and state High Courts have jurisdiction over civil matters. Forms-legal.com provides this template as a starting point for Nigeria-compliant documentation.