THE IMPACT OF TRANSFER PRICING REGULATIONS ON TAX PLANNING IN NIGERIA

ABSTRACT

Multinational companies (MNCs) engage in tax-planning strategies between their related parties that affect their profit and consequently their tax liability. Transfer pricing legislation addresses these tax planning strategies of MNCs resulting in increased tax revenues. The broad objective of this research paper was to investigate the impact of transfer pricing regulation on tax planning of multinational companies. The specific objectives were: to investigate if there is any significant difference between pre-regulation taxable income and tax liabilities of multinationals and post-regulation taxable income and tax liabilities of multinationals; challenges faced in the implementation of the regulation and possible solutions. The research designs adopted by this study are the survey research design and the causal comparative or ex-post facto research design. Descriptive analysis was use to analyse the responses from the questionnaires while paired sample t test were employed to analyse the secondary data.  This research reached the conclusion that there is no significant difference between pre- regulations taxable income and tax liability and post-regulations taxable income and 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.