Nigeria's Income Tax (Transfer Pricing) Regulations 2018: Conceptualizing the Elephant and “Plucking the Goose”

Abstract

AbstractIn 2015, the OECD gave the world a template to address base erosion and profit shifting and ensure that profit is taxed in the jurisdiction of value addition and / or where economic activities take place. The world's jurisdictions then embarked on implementing the template. Examining the legal framework subsequently put in place for the taxation of intangibles in Nigeria, this article argues that the distinct regimes for connected and unconnected persons’ transactions create flaws. It further asserts that these flaws are consequences of the conflict between the policy that underpins the legal framework and other policies in the country. It concludes that the legal framework may not be a “Swiss army knife” (providing Nigeria with all that is needed to combat transfer pricing issues associated with the transfer of intangibles by connected persons), as it creates issues that have undesired consequences for the taxation as well as the economic system.