Source:
- Income Tax (Transfer Pricing) Regulations 2018 (effective 12 March 2018), Part IV, Regulations 13–17 and Schedule to Regulation 17
Summary of local requirements
Strict Format: Not specified
Language: English
To download the legislation in the original language, go to:
Local File
Local file shall disclose detailed information on the enterprise’s related party transactions, including the following:
| (A) | Overview of the enterprise: |
| (I) | Organisational structure, including the setup, scope of responsibility and number of employees of each functional department of the enterprise |
| (II) | Management structure, including the parties to which each level of the management reports, and the locations in which such parties maintain their principal offices, etc. |
| (III) | Industry description, including an overview of the industry in which the enterprise operates and its development, other major economic and legal factors affecting the industry, such as industry policies, trade restrictions, as well as key competitors |
| (IV) | Business strategies, including the workflow, operational model and factors that contribute to value creation, etc., of each department and each operational stage of the enterprise |
| (V) | Financial data, including turnover, costs, expenses and profits for the different types of business and product offerings of the enterprise |
| (VI) | A description of business restructurings or intangibles transfers in which the enterprise has been involved in or affected by and an explanation of those aspects of such transactions affecting the enterprise |
| (B) | Related party relationship: |
| (I) | Information on related parties including the name, legal representatives, composition of senior management, address of actual operation of any related party (enterprise) that directly or indirectly own shares of the enterprise and with which the enterprise has entered into transactions, as well as the name, nationality and country of residence of any related party (individual) |
| (II) | Information on taxes of income tax nature to which the enterprise is subject, with details including types of the taxes, tax rates and applicable preferential tax treatments |
| (III) | Information on changes in related party relationship of the enterprise during the fiscal year concerned |
| (C) |
Controlled Transactions For each category of controlled transactions in which the reporting entity is involved, provide the followings: |
| (I) | Overview of Controlled Transactions: |
| (a) | Detailed description of the controlled transactions stating parties involved, timing, transaction value, settlement currency, contractual terms and conditions, trading models of the controlled transactions as well as explanations of how they are similar to or different from that of uncontrolled transactions |
| (b) | Copies of contracts or agreements relating to the controlled transactions and their execution |
| (c) | Transactional flow of the controlled transactions, including the flows of information, goods and materials, and capitals, as well as explanations of how they are similar to or different from that of uncontrolled transactions |
| (d) | A description of functions and risks, including the functions performed, risks assumed and assets used by the enterprise and its related parties for each category of controlled transactions |
| (e) | Key factors affecting the pricing of controlled transactions, including intangibles involved in the transactions and their impact on pricing, as well as location specific factors such as cost savings and market premium etc. Analysis on location specific factors shall focus on aspects such as labour costs, environmental costs, market size, degree of market competition, consumer purchasing power, substitutability of goods or services, and regulatory controls, etc. |
| (f) | Financial information on controlled transactions, including the amount involved for each related party and each category of controlled transactions, and the reporting line in the books of account and audited financial statements |
| (g) | Segmented data on turnover, costs, expenses and profits of controlled transactions and uncontrolled transactions; for items that could not be directly segmented and therefore have been allocated using appropriate allocation keys, information on how they are allocated and an explanation of how the allocation keys have been selected |
| (II) | Value Chain Analysis: |
| (a) | Flows of business, goods and materials, and capitals within the group, including design, development, manufacturing, marketing, sales, delivery, billing and payment, consumption, after-sale service, recycling, other processes related to goods, services or other relevant underlying targets of the controlled transactions and all the parties involved |
| (b) | Annual financial statements of each of the parties involved in the controlled transactions for the relevant accounting year |
| (c) | Measurement and attribution of value creation contributed by location specific factors |
| (d) | Allocation policies and actual allocation results of the group’s profits in the global value chain |
| (III) | Related-Party Equity Transfers |
| (a) | An overview of related party equity transfer, including background, parties involved, timing, pricing, payment method of the transfer, as well as other factors affecting the transfer |
| (b) | Information on the equity transferred, including information like the equity’s geographic location, timing of the transfer, methodology of the transfer, cost of the transfer, income generated from the transfer, etc. |
| (c) | Due diligence report or asset valuation report or any other information pertaining to the equity transfer |
| (IV) | Related party services: |
| (a) | An overview of related party services, including service providers and recipients, nature of services, characteristics, method of service delivery, pricing policies and methods, form of payments, and benefits received by each party in relation to the services provided, etc. |
| (b) | Methodology for determining the service costs, service items, service amount, allocation keys, calculation process and results |
| (c) | Where the enterprise and its group are involved in transactions of the same or similar nature with an unrelated party, the enterprise shall describe in detail how the transactions are similar to or different from related party transactions in pricing policies and results |
| (d) | Existing advance pricing agreements and other tax rulings to which the Service is not a party and which are related to the enterprise’s related party transactions |
| (V) | Comparability Analysis: |
| (a) | Factors considered in the comparability analysis, including characteristics of the goods or services involved in the transactions, functions performed, risks assumed and assets used by each party involved, contractual terms, economic environment, business strategies, etc. |
| (b) | Information related to the functions performed, risks assumed, and assets used by the comparable companies |
| (c) | Search process for comparables, data source, selection criteria and rationale for setting the criteria |
| (d) | Information of selected internal or external comparable uncontrolled transactions and financial information of comparable companies |
| (e) | Comparability adjustments and rationale for the adjustments |
| (VI) | Selection and Application of Transfer Pricing Method |
| (a) | Selection of tested party and rationale for the selection |
| (b) | Description of the methods considered for determining the arm’s length price in relation to each controlled transaction, the method selected as the most appropriate method together with explanations as to why such method was so selected |
| (c) | The contribution of the enterprise to the group’s overall profit or residual profit is required |
| (d) | Assumptions and judgment made in the process of determining arm’s length prices or profits |
| (e) | Application of reasonable transfer pricing method and result from comparability analysis to determine the arm’s length prices or profits |
| (f) | Other information supporting the selection of transfer pricing method |
| (g) | Analysis and conclusion of whether the transfer pricing for the related party transactions complies with the arm’s length principle |
| (VII) | Financial Information: |
| (a) | The reporting entity’s audited financial statements for the relevant year of assessment |
| (b) | Information and allocation schedules showing how the financial data used in applying the transfer pricing method may be tied to the annual financial statements |
| (c) | Summary schedules of relevant financial data for comparables used in the analysis and the sources from which that data was obtained |
Recommendations for Local File:
Regarding content requirements:
-
Organisational Structure with Functional Department Detail:
Nigeria requires the organisational structure to include the setup, scope of responsibility, and number of employees of each functional department. This level of staffing detail per department is not a standard OECD Local File requirement.
We recommend including the number of employees per functional department in the Management Structure subsection of the Entity Description section in TPDoc, alongside the standard organisational chart.
-
Industry Description with Key Competitors:
Nigeria explicitly requires an industry overview covering major economic and legal factors, industry policies, trade restrictions, and key competitors as part of the Local File overview — this goes beyond the OECD standard Local File, which focuses primarily on the entity's own business description.
We recommend including the industry description with key competitors in the Entity Description section of TPDoc, particularly the Business Description and Main Competitors subsections.
-
Related Party Tax Information:
Nigeria requires disclosure of the types of income taxes, tax rates, and any applicable preferential tax treatments to which the enterprise is subject. This is a Nigeria-specific disclosure not required under the standard OECD Local File.
We recommend documenting the tax profile of the Bahraini Constituent Entity — tax type, applicable rates, and any preferential treatments — in the Entity Description section of TPDoc, or as a separate annex saved in the Resources section.
-
Location-Specific Factors in Pricing:
Nigeria explicitly requires analysis of location-specific factors affecting pricing, such as cost savings, market premium, labour costs, environmental costs, market size, degree of market competition, consumer purchasing power, substitutability of goods or services, and regulatory controls.
We recommend including this location-specific factor analysis in the Price Setting Description section of the relevant Reporting Level in TPDoc, or in the Business Description subsection of the Entity Description section.
-
Segmented Financial Data:
Nigeria requires segmented data on turnover, costs, expenses, and profits of controlled and uncontrolled transactions, with explanation of the allocation keys used for items that cannot be directly segmented.
We recommend preparing a segmented financial data schedule as a separate document, saved in the Financial Accounts section of TPDoc.
-
Value Chain Analysis:
Nigeria requires a standalone Value Chain Analysis (VCA) covering the full flows of business, goods, materials, and capital within the group across all operational stages. It must include the annual financial statements of all parties involved, measurement of value creation contributed by location-specific factors, and the group's profit allocation policies and actual results across the global value chain. This is a significantly more demanding requirement than the OECD standard.
We recommend preparing a standalone VCA report and saving it in the Resources section of TPDoc for attachment to the Local File. Alternatively, Aibidia's VCA tool can be used to perform the VCA analysis.
-
Related-Party Equity Transfers:
Nigeria requires a dedicated section on related-party equity transfers, including background, parties, timing, pricing, payment method, geographic location of the equity, transfer methodology, cost, income generated, and any due diligence or asset valuation reports. This is not a standard OECD Local File requirement.
We recommend documenting any related-party equity transfers in a separate annex saved in the Resources section of TPDoc and attached to the Local File. Where applicable, the due diligence or asset valuation report should also be attached.
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Related-Party Services — Internal Comparables Disclosure:
Nigeria requires that where the enterprise or its group has transactions of the same or similar nature with unrelated parties, the enterprise must describe in detail how those transactions compare to the related-party transactions in pricing policies and results. This internal comparable disclosure is more detailed than what the standard OECD framework requires.
We recommend including this comparison in the Price Setting Description section, or in the Method Selection Reason and Application section of the relevant Reporting Level in TPDoc.
-
Profit or Residual Profit Contribution:
Nigeria explicitly requires documentation of the enterprise's contribution to the group's overall profit or residual profit as part of the method selection and application analysis. This is not a standard OECD Local File content requirement.
We recommend including this contribution analysis in the Method Selection Reason and Application section of the relevant Reporting Level in TPDoc, with cross-reference to the VCA where applicable.
-
Audited Financial Statements:
Nigeria requires the enterprise's audited financial statements (not merely management accounts) to be included in the Local File for the relevant year of assessment.
We recommend uploading the audited financial statements in the Financial Accounts tab of the Legal Entities section in TPDoc, and ensuring they are attached to the Local File.
Regarding format/structural requirements:
Nigeria does not prescribe a strict standardised format or template for the Local File. The documentation must be in English, prepared on a contemporaneous basis (ready before the due date for filing income tax returns), and submitted to the FIRS within 21 days of a written request.
We recommend preparing the Local File using TPDoc's standard Local File functionality, ensuring all required elements under the 2018 Regulations are covered and that the documentation is finalised before the income tax return due date.
Master File
The master file shall provide an overview of the global business operations of the Multinational enterprises (MNE) group to which the ultimate holding company belongs, and shall include the following information:
| (A) | Organisational Structure: |
| (I) | A description of the ownership structure of the taxable person with details of shares or other ownership interest held therein by other persons |
| (II) | A profile of the multinational group of which the taxable person is a part along with the name, address, legal status and country of tax residence of each of the enterprises comprised in the group with whom controlled transactions have been entered into by the taxable persons, and ownership linkages among them |
| (III) |
Chart illustrating the global organisational structure and ownership structure of the MNE group, and the geographical locations of all constituent entities A constituent entity refers to any operating entity of the MNE group, including corporations, partnerships, permanent establishments, etc. |
| (B) |
Description of MNE’s Business: A broad description of the business of the MNE and the industry in which it operates including: |
| (I) | Important drivers of business profits |
| (II) |
Descriptions of the supply chain and main geographic markets for the group’s five largest products or service offerings by turnover plus any other products or services amounting to more than five percent of group turnover The required description could take the form of a chart or a diagram. |
| (III) | A list and brief description of important service arrangements between constituent entities of the group, other than research and development services, including a description of the capabilities of the principal locations providing important services and transfer pricing policies for allocating service costs and determining prices to be paid for intra-group services |
| (IV) | Functional analysis describing the principal contributions to value creation by individual constituent entities within the group, that is, key functions performed, important risks assumed, and important assets used |
| (V) | A description of business restructurings, industrial restructurings, transfers of functions, risks or assets occurring within the group during the fiscal year |
| (VI) | A description of reorganizations occurring during the fiscal year within the group, that is, changes of legal form, debt restructuring, equity acquisition, asset acquisitions, merger and divestitures |
| (C) | Intangibles: |
| (I) | A general description of the MNE’s overall strategy for the development, ownership and exploitation of intangibles, including location of principal research and development facilities, location of research and development management, and their functions, risks, assets and personnel |
| (II) | A list of intangibles or groups of intangibles of the MNE group that are important for transfer pricing purposes and which entities own them |
| (III) | A list of important agreements entered between constituent entities and their related parties related to intangibles, including cost-sharing arrangements, principal research services agreements and licence agreements |
| (IV) | A description of the group’s transfer pricing policies related to research and development and intangibles |
| (V) | A description of any important transfer of interests in intangibles among related parties during the fiscal year concerned, including the entities, countries, and compensations involved |
| (D) | MNE’s Intercompany Financial Activities: |
| (I) | A description of financing arrangements between members of the MNE group and important financing arrangements with unrelated parties |
| (II) | The identification of any constituent entity of the MNE group that provides a central financing function for the group, including the country under whose laws the entity is organised and the state of tax residence of such entities |
| (III) | A description of the MNE’s general transfer pricing policies related to financing arrangements between connected persons |
| (E) | Financial and tax positions: |
| (I) | The MNE’s annual consolidated financial statements for the fiscal year concerned |
| (II) | A list of the MNE group’s existing unilateral advance pricing agreements, bilateral advance pricing agreements and other tax rulings relating to the allocation of income among countries |
Recommendations for Master File:
Regarding content requirements:
-
Supply Chain and Geographic Markets:
Nigeria requires descriptions of both the supply chain and the main geographic markets for the group's five largest products or service offerings by turnover, plus any other products or services exceeding 5% of group turnover.
We recommend including this information in the Supply Chain section of TPDoc.
-
Reorganisations During the Fiscal Year:
Nigeria explicitly requires a description of reorganisations during the fiscal year — covering changes of legal form, debt restructuring, equity acquisitions, asset acquisitions, mergers, and divestitures — as a separate item from the general business restructuring description. This is a more detailed requirement than the standard OECD Master File.
We recommend documenting any such reorganisations in the Business Restructuring section of TPDoc, clearly distinguishing between business restructurings (operational) and legal/financial reorganisations.
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R&D Facility Personnel and Functions:
Nigeria requires the intangibles section to include not only the location of principal R&D facilities and R&D management, but also their functions, risks, assets, and personnel. This level of R&D entity characterisation exceeds the standard OECD Master File requirement.
We recommend including the expanded R&D functional profile — covering functions performed, assets used, risks assumed, and key personnel — in the Intangible Assets section of TPDoc.
Regarding format/structural requirements:
Nigeria does not prescribe a strict standardised format or template for the Master File. The Master File must be prepared in English on a contemporaneous basis and submitted to the FIRS within 21 days of a written request.
We recommend preparing the Master File using TPDoc's standard Master File functionality, ensuring all required elements under the 2018 Regulations are covered.