By PETER EGWUATU

The new tax regulation for Nigeria that was recently approved by the Federal Government if well implemented will help reduce double taxation, Ernst & Young has said.

Speaking at a one day workshop tagged “Transfer Pricing (TP) on Wednesday, a representative of Ernst & Young, Mr. Josh Bamfo, said, Prior to the introduction of the new regulations of Transfer Pricing, the Nigerian domestic tax laws merely provided general anti-avoidance rules that related party transactions must be conducted at arm’s length without detailed guidelines on the application of the arm’s length principle.

“Accordingly, the Regulations were introduced to provide guidance on the application of the arm’s length principle. The Regulations seek to reduce the risk of economic double taxation, provide the revenue the tools to fight artificial transactions, and, provide multinational enterprises with certainty of transfer pricing treatment among other objectives.”

While explaining further on the Transfer Pricing, Bamfo said, “The regulations are primarily based on the Organization of Economic Co-operation and Development (OECD) principles, a generally accepted basis of transfer pricing principles.   However, the regulations also refer to the UN model which it states should also be used as a reference point in interpreting and applying the provisions.”

Meanwhile, Director, LTD (OIL & GAS) of FIRS, Mr. Ayayi Bamidele, also disclosed that the Nigerian income tax (Transfer Pricing) Regulations No.1, 2012 have been released by the FIRS, noting that “ The initial draft of the regulations was issued in April 2012, and subsequently the final draft was approved and gazetted on 21 September 2012. So in effect its implementation has continued depending on the accounting period of individual organizations. For instance if an organization accounting period ends in December 2012, it means from January it will begin to apply the new policy.”

He further said that, “Nigeria, being an integral part of the larger world that wants to be one of the 20 most developed countries in the year 2020 cannot afford to be left behind in tax development .In the era when cross border businesses are on the increase, the share of the apple should not be allowed to be skewed against Nigeria. The international community requires certainty in our tax system to meet one of the canons of taxation and to gain their confidence to doing business with Nigeria.”

While commenting on Transfer Pricing regulation,  Bamidele noted  that the regulations gave effect to the provisions of-(a)section 17 of the Personal Income Tax Act, CAP P8, Laws of the Federation of Nigeria, 2004 (as amended by the Personal Income Tax (Amendment) Act, 2011);(b) section 22 of the Companies Income Tax Act, CAP C21, Laws of the Federation of Nigeria, 2004 (as amended by the Companies Income Tax (Amendment) Act 2007; and (c) section 15 of the Petroleum Profit Tax Act, CAP 13, Laws of the Federation of Nigeria, 2004.