Transfer pricing to remain top tax risk – Andersen

The implementation of the landmark Nigeria Tax Act, 2025 (NTA) is set to trigger significant disruption across the nation's fiscal space, with Transfer Pricing (TP) maintaining its status as a high-stakes risk area for corporations throughout 2026.

According to a 2026 outlook report released by Andersen in Nigeria, the introduction of the unified NTA has ushered in a new era of international and domestic tax compliance.

The report notes that as taxpayers scramble to interpret the updated provisions, the complexities inherent in Transfer Pricing traditionally a major source of high audit adjustments and significant tax liabilities will remain a primary concern for the Nigeria Revenue Service (NRS) and multinational enterprises alike.

A central feature of the 2026 outlook is Nigeria’s aggressive alignment with the OECD’s Base Erosion and Profit Shifting (BEPS) initiatives.

The Andersen report points to Section 57 of the NTA, which mandates a 15% global minimum Effective Tax Rate (ETR) for constituent entities of large multinational groups with an aggregate turnover exceeding ₦20 billion.

Section 6(3) of the Act empowers the government to apply a top-up tax on Nigerian parent companies if their foreign subsidiaries pay an ETR below the 15% threshold.

Analysts at Andersen suggest these provisions are designed to protect the Nigerian tax base by disincentivizing group structures that use Transfer Pricing to shift profits to low-tax jurisdictions.

The NTA has also introduced a significant shift in how intercompany financing is treated. The restriction on interest deductions previously capped at 30% of EBITDA for loans with foreign related parties has now been expanded to include financing arrangements between all connected parties.

This expansion means that in addition to ensuring that interest rates meet the arm’s length principle, companies must now navigate potential tax leakages caused by stricter deductibility limits.

This change is expected to be a major point of friction during TP audits in 2026 as the NRS scrutinizes domestic and international intercompany debt.

Andersen forecasts that the Nigeria Transfer Pricing Regulations, 2018 (NTPR) will likely undergo a formal revision this year.

The firm expects the updated regulations to provide detailed guidance on analyzing financial transactions such as intra-group loans, guarantee fees, and cash pooling.

The report highlights a growing need for dialogue between the NRS and key stakeholders to address contentious provisions. A specific area of concern cited is the current limitation on royalty payment deductibility capped at 5% of EBITDA which often clashes with standard arm’s length dealings where royalties are typically structured as a percentage of sales.

As the 2026 fiscal year unfolds, Andersen warns that the combination of new legislation and a more rigorous audit environment ensures that Transfer Pricing will remain a critical flashpoint for tax risk and corporate strategy in Nigeria.