Revisiting Nigeria's multiple regulatory price control mechanisms has been saved
Revisiting Nigeria's multiple regulatory price control mechanisms
What should FIRS do?
All of these regulatory price control mechanisms may lead to situations in which taxpayers are unduly tasked with providing secondary proof to FIRS
In previous editions of our Inside Tax publications, we identified and reviewed some of the challenges and additional compliance burden being faced by taxpayers in relation to Nigeria's Transfer Pricing regime which include increased compliance cost (database costs, staff costs, consultant fees, etc.) and the need for additional guidance from FIRS on gray areas of the TP regulatory.
In this edition, we will review the challenges that taxpayers may face in harmonizing the demands and costs of Nigeria's various regulatory Price Control Mechanisms (PCM) with the obligations and requirement of Nigeria's Transfer Pricing Regulations (TPR).
Some of the PCMs under consideration include valuation practices of Nigerian Customs Services (NCS), approval of foreign fees for Technical Transfer Agreement (TTAs) by the National Office for Technology Acquisition and Promotion (NOTAP), approval of fees and agreements in the communication sector by Nigeria Communications Commission (NCC), as well as the notional crude oil selling price fixed for exploration and production (EP) companies by the Nigeria National Petroleum Corporation (NNPC).
NCS collects ad-valorem duties on goods imported into Nigeria, based on the value of goods declared by importers for customs purposes. In ensuring Nigeria is not short-changed, the NCS is permitted to use any of the various methods recommended by the World Trade Organization (WTO) in revaluing goods imported to Nigeria.