TO successfully implement Transfer Pricing (TP) regulations in Nigeria, PricewaterhouseCoopers (PWC), has advised the Federal Inland Revenue Service (FIRS) to embark on capacity building coupled with adequate enlightenment across the country.Scheduled to take off in Nigeriain June, 2012, Transfer Pricing refers to the setting, analysis, documentation and adjustment of charges made between related parties for goods, services, or use of property among others.According to PwC Partner/Director in charge of Tax & Corporate Advisory Services, Taiwo Oyedele, there is need for the FIRS to engage with tax officers across the country especially in the area of education.Oyedele explained that the proposed regulation is capable of increasing the profit of companies Nigerian, curtail leakages and boost the revenue profile of the country, adding that taxation currently accounts for about two per cent of Nigeria's revenue profile, compared to its ability to generate more than 20 per cent of the revenue composition.Accompanied by Manager, Tax & Corporate Advisory Services, Emuesiri Agbeyi, Oyedele also used the opportunity to appeal for an extension of the implementation period forabout one year in order to allow tax firms to transit to the new regulations successfully.According to PwC, the most appropriate method to determine whether transfer prices are consistent with prices between independent parties is the one that bestreflectthe economic reality and circumstances of the transaction.He said the proposed regulation on Transfer Pricing is hinged on the need to stem the loss of revenue accruable to companies and the country, adding that the law will help address the various losses incurred by companies in their transactions with their counterparts in other countries.According to him, Transfer Pricing Law will help protect Nigeria's tax base, increase government revenue through tax and protect the interest of local firms.Oyedele explained thatthe proposed regulation is based on the general anti-avoidance provisions in the various tax laws which require related party transactions to be conducted at arm's length, which stipulates that parties to a transaction be considered independent and on equal footing.He saidregulating Transfer Pricing will address issues bothering on determining the actual amount to be charged on goods and services for transaction parties and also in ensuring that the amount charged is appropriate.He explained that Transfer Pricing is significant for both taxpayers and tax administrations because it plays a major role in determining the income and expenditure, and therefore taxable profits of associated enterprises in different tax jurisdictions.Oyedele pointed out thatPWC can assist firms in the review and documentation of their transfer pricing policies in compliance with regulatory requirements and also ensure that firms respond promptly to tax audit and other associated issues.Speaking on sundry issues related to transfer pricing, Oyedele said: 'Some multinationals around the world control more resources than some countries. Microsoft annual turnover is more than $60 billion, ExxonMobil made profit of more than $40 billion and the Federal Government of Nigeria budget is about $30 billion. That is to give you an ideal.'These multinationals work in so many countries and each tax jurisdiction is concerned that their tax base might be eroded in the way multinationals move things around. So, Nigeria is joining the rest of the world. There are so many countries in the world where transfer pricing is regulated'.
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