Nigeria

There are currently no provisions for group taxation, group relief, or group filing of tax returns in Nigeria. Each legal entity within a group is treated as distinct and separate for CIT purposes.

Transfer pricing

A company involved in arrangements with a related party must ensure that the terms and conditions are carried out at arm’s length. 

The Transfer Pricing Regulations are applied in a manner consistent with the arm’s-length principle in Article 9 of the United Nations (UN) and Organisation for Economic Co-operation and Development (OECD) Model Tax Conventions on Income and Capital and the OECD Transfer Pricing Guidelines for Multi-national Enterprises and Tax Administrations. However, where there are inconsistencies between the model conventions and the local legislation, the provisions of the relevant local tax laws shall prevail.

The rules cover all transactions between ‘connected taxable persons’, which is broadly defined to include individuals, PEs created by head offices, subsidiaries, associates, partnerships, joint ventures, and trusts to the extent that they participate directly or indirectly in the management, control, or capital of another, or both of which have common control, management, or shareholders. Specifically, the rules apply to sale and purchase of goods; lease or sale of tangible assets; licensing, transfer, or use of intangible assets; provision of services; lending or borrowing of money; manufacturing arrangements; and any transaction that may affect profit and loss or any other incidental matter.

The rules are applicable to both domestic and cross-border related-party transactions.

The relevant tax authority may make necessary adjustments if it determines that an arrangement with a related party is not at arm’s length, in line with the Transfer Pricing Regulations.  

Where the NTA believes a disposition or transaction that reduces or may reduce the tax liability is artificial or fictitious, it may disregard the transaction or direct adjustments to counter the tax reductions.

Thin capitalisation

Nigeria does not have thin capitalisation rules; however, interest deductibility rules on foreign connected parties' loans were introduced based on the Finance Act 2019. The Nigeria Tax Act, with effect from 1 January 2026, further expands the scope of interest deductibility rules to include local connected parties. This restricts interest deductibility to 30% of EBITDA. Excess interest can be carried forward for up to five years. The rules cover connected party debt, including third-party debt guaranteed implicitly or explicitly by a connected person.

Controlled foreign companies (CFCs)

CFC rules grant the Nigerian tax authority the power to deem a portion of the undistributed profits of the foreign subsidiary of a Nigerian parent company as distributed (i.e. dividend) and assess the Nigerian company to income tax at a maximum rate of 34%.