Transfer Pricing In Nigeria

Transfer pricing represents the price that one division of a company charges another division in a company for goods and services. Transfer Pricing is used to determine the cost to charge another division, subsidiary, or holding company for services rendered.

Transfer pricing describes the form of inter-company pricing method between two or more related economic entities with respect to the intragroup supply of goods, services, finance, intellectual property.


Transfer pricing is regulated by the Income-tax (Transfer pricing) regulations 2018 (TP regulations) made pursuant to the Federal Inland Revenue Service (Establishment) Act, 2007


To ensure that associated/related enterprises and companies pay tax on an appropriate taxable basis corresponding to the economic activities deployed by taxable persons in Nigeria.


  • To ensure that the prices at which related entities exchange goods and services are in conformity with the fractions performed, the asset used and the risk assumed in generating the income to be taxed.

The transactions to which transfer pricing adjustments are made are as follows:

  • Sale and purchase of goods and services.
  • Sale, purchase, or use of intangible assets (intellectual property)
  • Transfer, purchase, license, or use of intangible assets
  • Provision of services
  • Lending or borrowing of money
  • Manufacturing agreement
  • Any transactions which may affect profit and loss or any other matter incidental to, connected with or pertaining to the above-listed transactions

In evaluating taxpayer’s-controlled transactions or series of transactions, the FIRS normally adopts one of the following methods in the line with regulation:

  • The comparable Uncontrolled Price
  • The cost-plus method
  • The transactions net margin method
  • The transactional profit split method

Any other method that may be prescribed by regulations by the service from time to time.

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