Effect of Transfer Pricing Regulations on Tax Revenue in Nigeria

This study evaluates the effect of transfer pricing regulations on tax revenue collection in Nigeria. Transfer pricing, referring to the pricing of transactions between related parties within multinational enterprise groups, is a major mechanism through which profits are shifted to low-tax jurisdictions, resulting in significant revenue losses for developing countries including Nigeria. The Federal Inland Revenue Service introduced Transfer Pricing Regulations in 2012, subsequently updated to align with OECD guidelines, to address this challenge. Using an ex-post facto and documentary design, the study analyses FIRS transfer pricing audit outcome data, published academic literature, and reports from civil society organisations monitoring illicit financial flows from Nigeria. Primary data from a survey of 60 tax professionals in Lagos and Abuja specialising in international taxation supplement secondary sources. Descriptive statistics, content analysis, and trend comparisons are employed. The study expects to find that while the regulations have improved documentation standards and enabled some revenue recovery, capacity gaps in FIRS's transfer pricing unit continue to limit the scale of enforcement relative to the magnitude of identified profit-shifting activity. Recommendations include increasing investment in transfer pricing audit capacity, requiring country-by-country reporting from all qualifying multinationals, and establishing bilateral advance pricing agreement frameworks with key treaty partners. Keywords: transfer pricing, tax revenue, multinational enterprises, FIRS, illicit financial flows.