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TAT delivers judgement on the first Transfer Pricing case: rules on TP methods, DRP and Penalties

TAT delivers judgement on the 1st Transfer Pricing case

The Tax Appeal Tribunal (TAT or “the Tribunal”), sitting in Lagos on 19 February 2020, delivered judgement in the tax appeal filed by Prime Plastichem Nigeria Limited (“the Appellant”) against the Federal Inland Revenue Service (FIRS or “the Respondent”).

Wole Obayomi

Partner & Head, Tax, Regulatory & People Services

KPMG in Nigeria


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TAT delivers judgement on the first Transfer Pricing case: rules on TP methods, DRP and Penalties

The Appellant is a private limited liability company that engages in the importation and trading of plastics and petrochemicals. The Appellant had approached the TAT to seek reliefs in respect of an additional liability of N1,738,481,875.33 relating to the audit of its purchase of plastics and petrochemical products from an offshore related party. 

The key issues for determination were:

  1. whether the Appellant proved its case before the Tribunal to be entitled to the claims and reliefs sought against the Respondent;
  2. whether the Respondent’s action in benchmarking the Appellant’s TP transaction with the Transactional Net Margin Methods for 2013 and 2014 was valid and in accordance with the Transfer Pricing Regulations 2012 and the Organisation for Economic Co-operation and Development/United Nation (OECD/UN) Guidelines;
  3. whether the Respondent’s action of using the Gross Profit Margin Method as the Profit Level Indicator in the instant Transfer Pricing transaction is valid and in accordance with the TP Regulations and OECD/UN Guidelines;
  4. whether the Appellant’s failure to file its returns within the prescribed period required by the extant tax laws validates the penalty and interests imposed by the Respondent vis-à-vis the provisions of Paragraph 4(2) of the TP Regulations 2012, Section 55 of the Companies Income Tax Act, 2004 and Section 32 of the Federal Inland Revenue Service (Establishment) Act 2007; and
  5. whether the Decision Review Panel (DRP) purportedly set up by the Respondent was in accordance with the TP Regulations.

TAT’s Decision  

The TAT delivered judgement in favour of the FIRS on all issues submitted and dismissed the appeal in its entirety.

We will issue a detailed newsletter on this judgement in due course.

For further enquiries, please contact

Wole Obayomi

© 2020 KPMG Professional Services, a partnership registered in Nigeria and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

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