Nigeria: Update On Electronic Filing Of Transfer Pricing Returns And Country-by-Country (CbC) Reports

Summary

The Federal Inland Revenue Service (FIRS) launched its electronic filing solution for Transfer Pricing (TP) returns called the E-TP PLAT 2.0 (the platform) in 2020.  The platform was introduced to allow taxpayers with Transfer Pricing (TP) and/or Country-by-Country Reporting (CbCR) obligations to file their TP declaration forms, TP disclosure forms, CbCR notification forms, and CbC report online.

Further to this initiative, the FIRS, in a recent communication, has stated that taxpayers that wish to continue physical filing of their TP and CbCR returns should first submit the returns electronically and attach the electronic acknowledgement of the hard copy returns before filing with the Service.

Details

Paragraph 13(3) and 14 of the Income Tax (Transfer Pricing) Regulations, 2018 impose an obligation on taxpayers with related party transactions to file TP Declaration and TP Disclosure forms. In addition, Paragraphs 3, 4 and 6 of the Income Tax (Country-by-Country Reporting) Regulations, 2018 impose an obligation to file a Country-by-Country Report and a notification form with the FIRS.

Prior to the introduction of E-TP PLAT 2.0, taxpayers filed their TP returns (TP Declaration and TP Disclosure forms) with the FIRS physically. The introduction of E-TP PLAT 2.0 therefore provides a convenient platform for taxpayers to comply with the provisions of the TP Regulations with ease.

As a first step, taxpayers are required to complete an E-filing application form on the E-TP PLAT 2.0.  The FIRS expects taxpayers to submit the completed form to its office after which a profile is created for the taxpayer to enable the use of the platform for TP returns filing.

Based on the  communication from the FIRS, it is now mandatory that all returns should first be submitted electronically and taxpayers that wish to file hard copies are required to attach the electronic acknowledgement to the hard copy returns before the Service would accept the returns. This new development applies for TP Returns filing for the 2020 Financial Year (FY) and going forward.

Implication

The implementation of the platform is a commendable development in the Nigerian TP space as it is expected that the platform would improve compliance with the TP Regulations by easing the compliance process for taxpayers.

It is therefore advisable that taxpayers with TP obligations immediately commence registration for the e-filing process to avoid late filing of TP returns for the 2020 FY and the penalties / sanctions that may occur in the event of default.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.