ANALYZING THE COMPLEXITIES OF TRANSFER PRICING REGULATIONS AND THEIR IMPACTS ON MULTINATIONAL CORPORATIONS IN NIGERIA

Abstract

The main objective of this study is to analyze the complexities of transfer pricing regulations and their impacts on multinational corporations in Nigeria. The target population was senior finance officers, six (5) from each of the 32 MNCs in Nigeria which made a total of two hundred and twenty-four (224) population. A census sampling technique was employed which allows the use of the entire population, therefore, the sample size of the study is 224. The study collected primary data through a questionnaire. The data was collected from the finance officers in MNCs in Nigeria through Google Forms. Thedatacollectedthroughthequestionnairewasedited,coded,andenteredintoSPSS23 which also aided in the data analysis. The data was analyzed using descriptive and inferential statistics. The descriptive statistics included frequency distribution tables and measures of central tendency (the mean), measures of variability (standard deviation), and measures of relative frequencies. The inferential statistics included a multiple regression model which established the relationship between variables. The findings from this study align with much of the existing literature, which suggests that APAs, penalties, and the Arm's Length Principle have significant impacts on the operational processes of MNCs. These regulatory measures force companies to adapt their operations to ensure compliance, often resulting in changes to internal controls, resource allocation, and decision-making processes. However, some perspectives highlight the potential downsides, particularly in terms of administrative burden and operational inefficiency. These conflicting views underscore the complexity of the relationship between tax regulations and operational practices, especially in a developing economy like Nigeria, where regulatory environments can be challenging. The findings suggest that while MNCs may experience significant operational changes due to compliance with tax regulations, the extent and nature of these changes can vary depending on the firm's capacity to adapt and the complexity of the regulatory framework. The study recommends among others that MNCs should invest in robust compliance frameworks that facilitate adherence to APAs, PC, and ALP. This includes developing comprehensive documentation practices and utilizing technology to streamline data management and reporting processes.