Nigeria Transfer Pricing Policy

Nigeria applies the arm’s-length principle to transactions between connected taxable persons through dedicated transfer pricing regulations, administered federally. The administration itself was reorganised by the 2025 reform package, which replaced the Federal Inland Revenue Service with the Nigeria Revenue Service — so guidance, forms and correspondence issued before and after that change sit under different letterheads while addressing the same underlying obligation.

The Nigerian regime is unusually front-loaded. Related-party transactions are declared and disclosed on prescribed forms filed with the annual return, which means the authority receives a structured map of a group’s intercompany dealings every year whether or not it ever opens an audit. The documentation then has to be consistent with what those forms already said.

That design changes what "getting it right" means. In a jurisdiction where disclosure is annual and structured, the risk is not an unexamined position — it is a position that contradicts the group’s own filed disclosure from two years earlier.

The statutory position

• Nigeria’s federal revenue administration is the Nigeria Revenue Service, established by the Nigeria Revenue Service (Establishment) Act, 2025 as the successor to the Federal Inland Revenue Service. The former FIRS web address now redirects to the Nigeria Revenue Service.
• The Act is one of four 2025 tax reform Acts: the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act and the Joint Revenue Board of Nigeria (Establishment) Act. The last of those was published in the Federal Republic of Nigeria Official Gazette No. 117, dated 26 June 2025.

Those references were read in the primary source — nrs.gov.ng (including the gazette it publishes) and firs.gov.ng — on 2026-08-19, and they are quoted because they were read. Legislation is amended and guidance is reissued, so confirm the current text before relying on any of it for a filing position.

Two things run in parallel: the annual declaration and disclosure filed with the return, and the transfer pricing documentation itself in master file and local file form. The first is a filing deadline; the second is an evidential standard. Missing either is a distinct failure with its own consequence, and treating them as one obligation is how groups end up compliant on paper and exposed in substance.

Country-by-country reporting applies to groups above the reporting threshold, on the shape BEPS Action 13 set out. Whether a particular Nigerian entity files locally or relies on its parent’s filing being exchanged depends on where the parent sits and what exchange relationship is in place — a question to settle before the deadline rather than at it.

Because the disclosure forms are prescribed, the practical work often starts with the forms rather than with the narrative. Mapping every intercompany flow into the categories the form recognises usually surfaces at least one transaction nobody had characterised — a recharge, a guarantee, a seconded employee — and that is the transaction that needs the analysis.

The three-tier documentation shape

Almost every regime in this guide organises documentation the way BEPS Action 13 recommended: a master file describing the group, its structure, its intangibles and its financing; a local file describing the local entity’s own controlled transactions and the analysis behind their pricing; and a country-by-country report giving administrations an aggregate view of where the group books revenue, profit, tax and people. That last report is owed only above a size threshold, and the OECD’s agreed figure is EUR 750 million of consolidated group revenue, or a near equivalent amount in domestic currency as of January 2015 (OECD, Action 13 country-by-country reporting (oecd.org)). Each jurisdiction legislated its own local-currency equivalent; those are not repeated on this page, because they were not read from the source.

What we confirm before a Nigeria file is signed off

• Which tiers of documentation are genuinely due for the period in front of us, checked against what NRS requires now — not against what it required when the last file was written.
• Whether every intercompany flow has been characterised — the recharge, the guarantee, the seconded employee and the loan are the ones routinely missing from the transaction list.
• That the paperwork tells one story — agreements, invoices, management accounts and the policy the file sets out, all saying the same thing about the same year.
• That the local narrative is consistent with what the group has already reported for Nigeria anywhere else, because the authority sees both.

Nigeria works from the OECD method set. The recurring live issue is comparability: the analysis is often run on comparables from outside Nigeria, and the file has to explain what was adjusted for the difference in market conditions rather than assert that a wider search was necessary. A stated adjustment can be argued about; an unstated one reads as an omission.

The five methods in the OECD framework

Comparable uncontrolled price (CUP)

Takes the price independent parties actually charged each other for the same thing and applies it. Nothing beats it for directness, which is why several administrations state a preference for it, and nothing is harder to find: product, volume, market and contract terms all have to line up before the comparison holds.

Resale price

Starts from the price the related distributor charges an independent customer and works back by an arm’s-length gross margin. Suits a distributor that resells without transforming the goods, and it is sensitive to how the functions actually split — one carrying marketing risk is not comparable to one that does not, whatever the contract says.

Cost plus

Prices the transaction as cost plus the margin an independent supplier would have earned on the same work. Common on toll manufacturing and shared-service arrangements. Getting it right is an exercise in cost accounting discipline: the base has to be defined, consistent and reconcilable to the accounts.

Transactional net margin (TNMM)

Benchmarks the tested party’s net profit indicator against independent companies doing broadly similar work. It carries more documentation worldwide than the other four combined, precisely because it forgives product differences — and that is also its weakness, because the comparable search then does all the work.

Profit split

Splits the profit the controlled transaction produced between the participants on a basis reflecting their respective contributions. Used where a one-sided analysis cannot work — highly integrated operations, unique contributions on both sides, or risk that is shared rather than borne by one party.

No method is correct in the abstract. The one that holds up in Nigeria is the one whose selection is reasoned on the record — with the alternatives named and rejected for stated reasons — because a method presented without alternatives reads as a default rather than a choice.

We build a Nigeria file the way an examiner reads one: functional analysis first, method second, benchmark third. A file assembled in the other order tends to have a conclusion in search of a rationale, and it shows.

What a Nigeria engagement covers

• Transaction mapping and delineation. Every related-party flow into and out of the Nigeria entity, characterised and reconciled to the ledger, before any analysis begins.
• Functions, assets and risks. What the Nigeria operation really does, who takes the decisions, and which risks it can actually control. Everything downstream depends on getting this right, and it is the part most files compress.
• Method selection, reasoned on the record. The method chosen for each tested transaction, with the alternatives considered and the reason each was set aside.
• Benchmarking you can audit. The search criteria, every screening decision and every comparability adjustment set out in full, so a reviewer reproduces the result rather than building their own.
• Documentation to NRS’s expected shape, consistent with the group’s master file and with what has been reported for Nigeria elsewhere.
• Sourcing, stated. Each threshold, deadline and rate in the finished file is checked against the Nigeria Revenue Service (NRS) for the relevant period. Where we cannot confirm a figure, the file explains the mechanism and gives no number.

Advance certainty and dispute resolution

Nigeria provides for treaty-based mutual agreement procedure where an adjustment produces double taxation, and there is a domestic objection and appeal route for the assessment itself. Both are documentary processes, so their outcome is largely decided by the quality of the file that existed before the dispute started.

How we work

The fee is agreed in writing before any work starts, and you review the result before anything is filed. Where your Nigeria entity sits relative to our offices makes no difference to how the file gets built. If you want to talk it through first, the helpline answers 24 hours a day and there is no obligation attached to a call — contact us or read our transfer pricing service page for what a full engagement includes.

What has actually changed in Nigeria is the starting point of an audit. It used to begin with an information request; it now begins with the group's own exchanged data and a risk assessment already formed. That moves the taxpayer's work earlier — the file has to be persuasive on arrival rather than developed in correspondence.

Where challenges concentrate in Nigeria

• Head-office and management service charges into Nigerian subsidiaries are a standing area of challenge. The question asked is what the Nigerian entity received that it could not have obtained locally, and an allocation formula does not answer it — evidence of the service being delivered does.
• Naira movement against the currency an intercompany price is set in can invert a margin inside a single year. A policy expressed as a fixed foreign-currency price behaves as a variable naira margin, and a group that has not decided which of the two it is defending will be asked to.
• Consistency across years is scrutinised because the annual disclosure makes it visible. A method that changed without an explanation, or a related party that appeared and vanished, is a question waiting to be asked, and the answer is much cheaper to write at the time.

What it costs when the file is not there

The cost of a thin file in Nigeria is rarely just the tax. It is the adjustment, the charge or penalty attached to it, the years it stays open, the management time an audit consumes, and the corresponding position in the counterparty jurisdiction that may not be relieved. Priced against that, the documentation is the cheap part.

By business size

Owner-managed group

A Nigerian company with a single offshore affiliate still files the declaration and disclosure and still needs a written basis for the price. The analysis can be proportionate; the filings are not optional.

Mid-market group

Several intercompany flows across goods, services and financing means several tested transactions. The file that holds up is the one where the policy explains why each was priced the way it was.

Multinational group

Master file, local file and country-by-country reporting all engage, and the Nigerian local file has to be legible next to the group’s own reported figures for Nigeria.

By industry

Oil, gas and energy services

Related-party technical services, equipment leases and cost pools are the classic Nigerian transfer pricing set, and the allocation of risk between the service entity and the operator is where the argument sits.

Consumer goods and manufacturing

Imported inputs from a related supplier plus a royalty for the brand create two priced flows into one margin, and they have to be tested separately before they are defended together.

Financial services

Intra-group funding, shared systems and guarantee arrangements each need their own arm’s-length basis, and the guarantee is routinely the one with none.

Read these as starting points rather than categories. The transfer pricing question is set by the group structure and the intercompany agreements, not by what the business sells — so two Nigeria companies of the same size in the same sector routinely need completely different files. The sector says where to look; the agreements say what is there.