Managing Transfer Pricing Risks in Multinational Subsidiaries Operating in the Nigerian Tax Environment

This research examines the management of transfer pricing risks by multinational company subsidiaries operating within Nigeria's evolving tax regulatory environment. Transfer pricing, which refers to the prices set for transactions between related entities within a multinational group, is a central issue in international tax management and a significant source of tax base erosion risk for developing country revenue authorities. Nigeria's Federal Inland Revenue Service has strengthened its transfer pricing regulations since 2012, with ongoing updates that impose disclosure obligations and documentation requirements on multinational subsidiaries. The study adopts a professional practice and applied research design, collecting primary data through structured questionnaires and semi-structured interviews with 45 tax directors, chief financial officers, and transfer pricing advisors in multinational subsidiaries and professional services firms in Lagos. Thematic analysis and descriptive statistics are used. The theoretical framework draws on the arm's length principle of international taxation and the corporate tax risk management framework. The study examines how multinational subsidiaries document intercompany transactions, apply acceptable transfer pricing methods, manage audit risk from the Federal Inland Revenue Service, and balance tax optimisation objectives with compliance obligations. Findings are expected to highlight that insufficient documentation practices and limited awareness of Nigerian-specific comparables data are primary risk drivers. Recommendations include adoption of comprehensive transfer pricing policies, investment in local benchmarking databases, and proactive advance pricing agreement applications with the Nigerian tax authority. Keywords: transfer pricing, multinational subsidiaries, tax risk, Nigeria, FIRS