International Transfer Pricing Regulation: Nigerian Experience
Multinational enterprises (MNEs), as any other international business concern, have among other objectives, the reduction of foreign exchange risk, duties or tariffs, foreign and domestic taxes, which ultimately maximise the enterprises profitability. The use of international transfer pricing strategy by MNEs remains on the surface, a justifiable management tool for achieving acceptable corporate objectives, only to the extent permissible by relevant tax laws; otherwise, creative transfer pricing strategies could be subject to abuse, manipulation, exaggeration and sometimes lead to monumental loss of tax revenue through the unethical movement of one nations tax revenue to another. This paper discusses the common transfer pricing strategies employed by multinational enterprises, and the realities of emerging economy like Nigeria in the use of appropriate legislation in controlling the abuses of unwholesome transfer pricing strategies.
Keywords: International transfer pricing; foreign exchange risk; exaggerated transfer pricing