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Tax Appeal Tribunal Delivers Judgement in maiden Transfer Pricing case in Nigeria

T.A.T Delivers Judgement in maiden TP Case in Nigeria

The Tax Appeal Tribunal (TAT or “the Tribunal”) sitting in Lagos recently delivered judgement in the case between Prime Plastichem Nigeria Limited (PPNL or “the Appellant”) and the Federal Inland Revenue Service (FIRS or “the Respondent”) on Transfer Pricing (TP).

Wole Obayomi

Partner & Head, Tax, Regulatory & People Services

KPMG in Nigeria


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This is significant as it was the first TP judgement delivered in Nigeria since inception of the TP Regulations in 2012.

PPNL is a private limited liability company engaged in trading of imported plastics and petrochemicals in Nigeria. During 2013 and 2014 financial years (FYs), PPNL entered into a related party transaction with Vinmar Overseas Limited (VOL) for the supply of petrochemical products.

PPNL adopted the Comparable Uncontrolled Price (CUP) TP method to test whether the terms of the transaction with VOL for 2013 FY were at arm’s length. In 2014 FY, PPNL changed the testing method to Transactional Net Margin Method (TNMM) using Operating Margin (OM) as the Profit Level Indicator (PLI). This, according to PPNL, was due to lack of information required for applying CUP. While the FIRS agreed with the change, it opted for Gross Profit Margin (GPM) as the most appropriate PLI, albeit for the two years. This led to an additional assessment of ₦1.7 billion.

TAT ruled in favour of the FIRS on all the issues raised by PPNL. A review of the issues tabled before the TAT by the Appellant shows that the Appellant based its case largely on the powers of the FIRS to make the adjustment. On the other hand, the FIRS based its response on core TP technical position to support the approach adopted. We have summarized below, the issues raised in the appeal and the pronouncement of the Tribunal in each instance.

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