IMPACT OF TRANSFER PRICING REGULATIONS ON TAX PLANNING IN NIGERIA

Eiya. O. (), Izevbigie, D.P.I. () and Dauda, H.A.
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Eiya. O.: Department of Accounting, Postal: University of Benin, Benin City, Nigeria, https://jted.citn.org/
Izevbigie, D.P.I.: Department of Entrepreneurship, Postal: University of Benin, Benin City, Nigeria,, https://jted.citn.org/
Dauda, H.A.: Department of Accounting, Postal: University of Benin, Benin City, Nigeria, https://jted.citn.org/

Journal of Taxation and Economic Development, 2023, vol. 22, issue 2, 1-12

Abstract: This paper draws motivation from the fact that despite the recent amendments relating to transfer pricing regulations in 2018 in Nigeria, the tax revenue losses as reported by the Tax Justice Network (2021) amounting to US$1.77 billion is quite alarming; thus, creating a curiosity and research gap, and therefore a calculated attempt to contribute to the growing numbers of empirical literature on the nexus between T.P regulations and tax planning. The study, in a bid to achieve this broad objective of the impact of T.P regulations on tax planning, relied upon the following specific objectives which are to: investigate if there is any significant difference between pre- regulation taxable income of multinationals and post-regulation taxable income multinationals; and examine if there is any significant difference between pre-regulation tax liability of multinationals and post-regulation tax liability of multinationals. The research design adopted by this study is the causal-comparative or ex-post facto research design. Paired sample t test was employed to analyse the secondary data of nine (9) MNCs which were chosen on the basis of convenient sampling, and results of the analyses show that there is no significant difference between pre- regulations taxable income and post-regulation taxable income, and there is no significant difference between pre- regulations tax liability and post-regulations tax liability. Recommendations from this research include Nigeria tax authorities should review their transfer pricing regulation, check for inefficiencies, and proffer effective solutions; transfer pricing regulations compliance agencies should be set up in order to ensure maximum compliance of MNCs. In conclusion, transfer pricing regulation in Nigeria does not have a significant impact on taxable income and tax liability reported by MNCs.

Keywords: Transfer pricing regulation; Tax planning; MNCs (search for similar items in EconPapers)
JEL-codes: E62 H25 (search for similar items in EconPapers)
Date: 2023
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