MAZARS TRANSFER PRICING
In recent times, Transfer Pricing has become the biggest tax issue facing multinational enterprises, as tax authorities across the globe seek to implement new guidelines and regulations to combat international tax evasion.
At Mazars Nigeria, our transfer pricing specialist team would help you navigate the dynamic transfer pricing environment while offering strategies that integrate local knowledge with a global perspective.
Around the world, the global business environment is highly dynamic. The unpredictable business environment presents multinational companies with significant challenges in planning and documenting their intercompany pricing policies. Consequently, Transfer pricing issues have risen to the forefront of international tax concerns as cross-border trade has expanded exponentially.
Following the lead of the Organisation for Economic Co-operation and Development (OECD), tax authorities worldwide have instituted regulations requiring multinational enterprises (MNEs) to document intercompany transactions and comply with the arm’s length principle. Transfer pricing is one of the key issues in OECD’s 2015 BEPS (Base Erosion and Profit Shifting) Action plan. BEPS is of major significance for developing countries due to their heavy reliance on corporate income tax, particularly from multinational enterprises. Engaging developing countries in the international tax agenda is important to ensure that they receive support to address their specific needs and can effectively participate in the process of standard-setting on international tax.
Over 135 countries and jurisdictions are collaborating on the implementation of 15 action plans to tackle tax avoidance, improve the coherence of international tax rules, and ensure a more transparent tax environment. The United States of America (USA) and the European Union (EU) introduced the ‘Foreign Account Tax Compliance Act (FATCA)’ and ‘Directive of Taxation’ respectively as initiatives to mitigate the effects of profit-shifting by multinationals.
OVERVIEW OF TRANSFER PRICING IN NIGERIA
The 2018 Nigeria Transfer Pricing Regulations have shown the readiness of the tax authority in Nigeria to ensure that transactions between connected parties are carried out at prices that reflect the economic substance of the transactions. The Nigeria Transfer Pricing (TP) Regulations require taxpayers to carry out all transactions with related parties at arm’s length.
With the introduction of TP rules to the Nigerian tax system, it has become imperative for taxpayers to appropriately plan and manage their related party transactions in order to avoid material additional tax liabilities in the event of a TP audit. As a result, it has increasingly been under the spotlight as tax authorities focus on cross border transactions between connected parties as a means of securing increasing tax revenue.
The Nigeria TP regulations are to be applied in a manner consistent with the OECD Guidelines and the arm’s length principle in Article 9 of the UN and OECD model tax conventions. The 2018 Regulations have stiff penalties for noncompliance For the purpose of regulation 17, a connected person shall maintain three-tier documentation; Local file, Master file, and Country-by-Country Reporting.
GLOBAL KNOWLEDGE CENTER
Mazars has established a group of transfer pricing professionals who possess a high level of knowledge and experience in the key areas of international transfer pricing. In the years since its inception, the Global Knowledge Centre has proved to be a highly efficient coordination and knowledge sharing centre of the Mazars integrated partnership, serving the largest clients and delivering unique solutions for all industries.
WHAT MAKES MAZARS DIFFERENT
Our team in Nigeria consists of highly-skilled tax specialists who ensure that we are able to provide effective and practical transfer pricing solutions. We can also draw upon transfer pricing expertise from the 91 countries in our unique international practice so as to ensure that we produce results that fit with commercial and tax strategies.
HOW MAZARS CAN HELP
Mazars is an integrated international partnership of independent professional service firms that provide a full range of audit and assurance, tax and advisory services. Our team consists of tax specialists, accountants, and financial specialists who ensure that we can provide, develop, and implement customized transfer pricing solutions that fit with our clients’ commercial and tax strategies. Our team has dealt with clients on a range of issues, including transfer pricing assurance and documentation, planning, and structuring. This provides us with a broad and deep knowledge of the solutions that have proved successful with a range of clients across various industries. We also draw upon transfer pricing expertise from across the world to ensure that we provide our clients with truly global transfer pricing solutions.