Integration of Transfer Pricing and Customs Valuation | KPMG | NG

Integration of Transfer Pricing and Customs Valuation – How practicable in Nigeria?

Integration of Transfer Pricing and Customs Valuation

In Nigeria today, trade facilitation has become an important element of economic policy. The Nigeria Customs Service (NCS) has a unique position within the heart of the international supply chain of goods and services. It is from the outbound and inbound supply of goods that the NCS is able to generate revenue for the nation through proper valuation of goods and levying the appropriate duty on such items

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Integration of Transfer Pricing and Customs Valuation – How practicable in Nigeria?

In Nigeria today, trade facilitation has become an important element of economic policy. The Nigeria Customs Service (NCS) has a unique position within the heart of the international supply chain of goods and services. It is from the outbound and inbound supply of goods that the NCS is able to generate revenue for the nation through proper valuation of goods and levying the appropriate duty on such items.

In the same vein, the Federal Inland Revenue Service (FIRS) through the issuance of the Nigerian Transfer Pricing (TP) Regulations ensures that the values placed on goods and services traded amongst related parties are reasonable from an arm’s length perspective. This is also to ensure that the nation is not robbed of revenue due to it by erosion of the tax base via mispricing of related party transactions.

As a result of globalization and increasing cooperation among governments on trade and economic development, cross border transactions between multinational entities are playing important roles in world trade. The challenge posed by globalization in this regard is the potential risk of Multinational Enterprises (MNEs) manipulating prices of goods sold across borders with the effect of paying little or no taxes in jurisdictions where they have nexus.
 

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