Transfer Pricing in Nigeria: The Utility of Advance Pricing Agreements

Olamide Akinla (ADIT) LL.M (Tax) (London) is a Barrister and Solicitor of the Supreme Court of Nigeria practising in the law firm of Tayo Oyetibo & Co.

The Nigerian Regulations employ the term ‘Advance Pricing Agreement’ as opposed to the language of the OCED Transfer Pricing Guidelines which uses the term ‘Advance Pricing Arrangements’. Difference in terminology notwithstanding, the objectives of both the Advance Pricing Agreement and the Advance Pricing Arrangement are indistinguishable.

INTRODUCTION
Nigeria introduced Transfer Pricing Regulations in August 2012. One of the innovations of the Regulations is the introduction of Advance Pricing Agreements (APAs). This discourse would, inter alia, examine what an APA is, the types of APAs, their relevance to both taxpayers and tax administrations, the provisions of the Nigerian Transfer Pricing Regulations relating to APAs and recommendations for best practices. However, before discussing APA, it would be necessary to succinctly define ‘transfer pricing’. So, what then is ‘transfer pricing’?