Nigeria’s newly enacted tax reforms could lead to longer transfer pricing audits as stricter penalties and expanded enforcement powers raise the stakes for multinational companies, tax professionals have said.
In a recent Andersen report titled ‘The NTAA 2025: Key Provisions Reshaping Transfer Pricing Audits in Nigeria,’ Amaka Onyeani and Nnamdi Echegwisi, transfer pricing experts, said some of the new provisions may increase disputes and prolong audit timelines.
“It is important that tax provisions reduce uncertainty for taxpayers and keep the tax authorities accountable and fair when conducting TP audits. With these provisions, there may be an incentive to open audits and unnecessarily prolong them,” the report said.
The firm explained that one of the most significant changes under the new law is the extension of the statute of limitations for certain tax reviews, allowing older transactions to remain open to scrutiny for longer.
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The concern comes as businesses assess how the Nigeria Tax Administration Act (NTAA) 2025 will affect documentation requirements, audit timelines, and penalty exposure for multinational groups with related-party transactions in Nigeria.
Transfer pricing governs how related companies within multinational groups price cross-border transactions such as management fees, royalties, intra-group services, and goods supplied between subsidiaries.
Because these arrangements determine where profits are reported and taxed, they remain a major focus for FIRS as Nigeria seeks to improve non-oil revenue collection.
Andersen also highlighted new penalty and interest provisions tied to additional tax assessments arising from transfer pricing adjustments, saying these could materially increase financial exposure for companies under audit.
“The nature of the provisions is particularly concerning because the review period and applicable penalties and interest may accumulate over long periods before taxpayers become aware that the tax authority disputes their TP position,” the report stated.
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Tax professionals say the implications are significant for multinational businesses already facing growing compliance expectations across Africa.
“Multinationals will operate under a more structured and closely supervised transfer pricing regime,” Onyinye Afolabi, a transfer pricing specialist at a consulting firm in Abuja, told BusinessDay.
According to Afolabi, the new framework signals a shift toward more data-driven and risk-based enforcement by tax authorities.
“FIRS will rely more on real-time data, e-invoicing information, cross-border reporting frameworks, and risk-based audit tools,” she said.
Nigeria’s stronger focus on tax enforcement comes amid wider pressure to boost domestic revenue mobilisation.
FIRS collected N22.59 trillion in tax revenue during the first nine months of 2025 as it pushes to widen the tax base and improve collections.
Despite recent gains, Nigeria’s tax-to-GDP ratio remains around 10 percent, among the lowest globally, increasing pressure on the government to close leakages linked to profit shifting and tax avoidance.
That push mirrors a broader global crackdown on base erosion and profit shifting, particularly by multinational companies that shift profits across jurisdictions to reduce tax liabilities. The Organisation for Economic Co-operation and Development estimates that base erosion and profit shifting cost governments globally between $100 billion and $240 billion in lost revenue annually.
Against that backdrop, tax professionals say Nigeria’s latest reforms reflect a deliberate shift toward tighter monitoring of cross-border corporate transactions.
Tax and transfer pricing consultant Boluwatife Agbato said the reforms reflect a broader strategic move by Nigerian tax authorities.
“The direction of this reform is to widen the tax base and expose multinational enterprises more effectively to scrutiny, while aligning Nigeria more closely with global tax transparency standards,” Agbato said.
He added that businesses are already reviewing internal tax positions and documentation processes in response.
“Many have started reviewing tax planning strategies around the reform and training internal teams to understand what the new rules will require,” he said.
Tax advisers say management fees and intra-group service charges are likely to remain key pressure points in future audits.
While many professionals agree the reforms could improve transparency and reduce aggressive profit shifting, they say implementation will determine whether the changes strengthen compliance without creating excessive uncertainty for taxpayers.
With the law now in force, multinational companies are expected to reassess transfer pricing documentation, internal tax governance frameworks, and dispute readiness as FIRS ramps up enforcement under the new tax regime.