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Nigeria: Interest On Intercompany Loan Incurred By An Oil Company Is Tax Deductible Subject To Transfer Pricing Rules

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Nigeria: Interest On Intercompany Loan Incurred By An Oil Company Is Tax Deductible Subject To Transfer Pricing Rules

Last Updated: 30 September 2014

Article by Taiwo Oyedele

The Tax Appeal Tribunal (TAT) on 18 September 2014 passed a judgement in a case between Nigeria Agip Oil Company Limited and the Federal Inland Revenue Service (FIRS) regarding the deductibility of interests on intercompany loans.

The TAT ruled that in so far as such intercompany loans meet the arm’s length principles, in other words, if the terms are similar to a loan between unrelated parties, then the interest is tax deductible.

The FIRS has long held the view that interest on any intercompany loan by an upstream oil company is not tax deductible. The TAT ruling effectively supports common law principles and the need for a transfer pricing analysis by related parties regarding such transactions.

See a copy of the ruling below and our tax alert for further insights.

Download Tax Alert – TAT Ruling on Intercompany Interest_Sep 2014

Download TAT Ruling – Interest on interco loan by oil companies

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Dimension Transfer Pricing International Taxation South African Tax Law
Jurisdictional audience Global audience, covers all jurisdictions Global audience, covers all jurisdictions South Africa specific, relevant to SADC region
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Dimension Conducting a Transfer Pricing Trial Effectively Managing Tax Teams Indirect Taxation Tax Risk Management
Jurisdictional audience Global audience Global audience Global audience, with local adaptation Global audience
Ideal for In-house tax, TP managers, litigators, advisors preparing for audits, ADR, trial Heads of tax, managers, team leads, controllers, emerging leaders VAT, GST, customs, finance managers, AP, AR, compliance specialists Tax managers, risk officers, controllers, advisors building governance
Core focus Case theory, evidence files, expert reports, witness prep, courtroom strategy Operating models, KPIs, workflows, stakeholder management, coaching VAT design, place of supply, input credits, exemptions, WHT interactions Risk identification, controls, documentation, audit readiness, dispute playbooks
Delivery mode Online, live sessions plus guided self-study Online, live sessions plus guided self-study Online, live sessions plus guided self-study Online, live sessions plus guided self-study
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5000-word assignment if PG-Cert option elected		 End of module progress assessment

5000-word assignment if PG-Cert option elected		 End of module progress assessment

5000-word assignment if PG-Cert option elected		 End of module progress assessment

5000-word assignment if PG-Cert option elected