AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
If you own a Nigerian company and a company abroad, transactions between them must be priced as if they were unrelated (arm's length). Nigeria's Transfer Pricing Regulations require a TP declaration and a disclosure filed with the company tax return, and documentation prepared by the filing date and produced within 21 days of a request; groups with controlled transactions under ₦300 million are exempt from contemporaneous documentation but must still price at arm's length.
Many diaspora founders end up with two companies: one where they live, one in Nigeria. The foreign company might license software, provide management, buy goods or lend money to the Nigerian one. Each of those is a transaction between connected persons, and both tax authorities have rules to stop profit being moved by setting the price. This guide covers the Nigerian side and points to the questions to ask on the other side.
The rule in one sentence
PwC's Nigeria summary (reviewed May 2026) says connected taxable persons must transact at arm's length; the rules follow Article 9 of the OECD and UN model treaties and the OECD Transfer Pricing Guidelines, with Nigerian law prevailing where they differ. They cover goods, assets, services and lending, both cross-border and between Nigerian companies, and the tax authority may adjust a price that is not arm's length or disregard an artificial transaction.
Which transactions are caught
- Management, technical or consultancy fees charged by the foreign company.
- Royalties for software, brand or know-how.
- Sales of goods between the companies, in either direction.
- Loans and the interest on them.
- Staff shared between the companies, and recharged costs.
Two related limits matter in practice. From 1 January 2026, PwC notes that interest on connected-party debt is deductible only up to 30% of EBITDA, with the excess carried forward for up to five years. And the 2018 Regulations, as summarised by KPMG, cap the deduction for the use of rights in an intangible at 5% of the EBITDA from the activity in which the right is used.
What you file and when
The Income Tax (Transfer Pricing) Regulations took effect on 12 March 2018 (KPMG). Grant Thornton's summary (January 2025) describes the compliance cycle:
| Item | What it is | Timing |
|---|---|---|
| TP declaration | States that the company has connected persons | Filed with the company tax return |
| TP disclosure | Lists the controlled transactions and values | Filed with the company tax return |
| TP documentation | Explains the transactions, the method and the comparables | In place by the return due date; produced within 21 days of a request |
| Under ₦300m of controlled transactions | Exempt from contemporaneous documentation | If requested, within 90 days of the notice |
The company tax return itself is due within six months after the financial year end, or 18 months after incorporation if earlier (PwC, May 2026). For first-year timing, see company tax filings when the owner lives abroad.
Penalties
Both KPMG and Grant Thornton give the penalty for failing to provide documentation as the higher of ₦10 million or 1% of the total value of controlled transactions, plus ₦10,000 for each day the failure continues. Disclosure failures attract the higher of ₦10 million or 1% of the value of the transactions concerned. The two summaries describe the late declaration penalty differently, so check the current figure with your adviser.
Both summaries describe rules administered by the FIRS. Since the 2025 tax laws, the Nigeria Revenue Service has taken over; ask your adviser to confirm how the Regulations are applied under the new Acts.
Choosing a price
Grant Thornton lists the methods: comparable uncontrolled price, resale price, cost plus, transactional net margin and transactional profit split, plus any other method the tax authority prescribes. For small diaspora groups the common cases are:
- Management or support services: usually cost plus a mark-up, with evidence the service was provided and benefited the Nigerian company.
- Goods bought from the foreign company: the price an unrelated buyer would pay, or a resale margin comparable to independent distributors.
- Loans: an interest rate an unrelated lender would charge a borrower of the same risk, in the same currency.
Example only. A UK company employs a finance lead who spends 40% of her time on the Lagos subsidiary. Her total cost is £60,000 a year, so the cost attributable is £24,000. With a 5% mark-up the recharge is £25,200 a year. The documentation shows the time records, the services, why 5% is supportable, and that the Lagos company would otherwise have hired someone. The mark-up itself must be supported by comparables or a recognised approach; 5% here is only an illustration.
The other side of the transaction
The foreign company's tax authority looks at the same price from the other direction. A fee that Nigeria thinks is too high, the other country may think is too low. Points to raise with your adviser:
- UK: HMRC exempts most small and medium enterprises from UK transfer pricing, but not for transactions with a party in a non-qualifying territory. HMRC's manual lists Nigeria among territories with a suitable treaty non-discrimination article, so it is a qualifying territory (INTM412090, updated October 2026).
- US: section 482 lets the IRS adjust income between commonly controlled taxpayers to reflect arm's length results (IRS page reviewed February 2026).
- Elsewhere: most countries apply OECD-based rules with their own thresholds; check locally.
Management fees and royalties raise further Nigerian points, including withholding tax and NOTAP registration. See management fees from a Nigerian subsidiary and NOTAP registration for fees paid abroad.
Steps
- List every flow between the companies for the last year: fees, goods, loans, recharges.
- Put each one in a written agreement, signed before the services start. See intercompany invoices between Nigeria and abroad.
- Choose and record a pricing method for each.
- Check whether controlled transactions exceed ₦300 million in the year.
- File the declaration and disclosure with the company tax return.
- Keep the documentation file ready to send within 21 days.
Where Pryme fits
Clean evidence makes transfer pricing easier. A Pryme Business Account holds NGN, USD, GBP and EUR with local details for each, so intercompany payments in each currency sit in one record (business multicurrency), and the Compliance agent can prepare a list of controlled transactions for your adviser; a person approves above a set ceiling.
Questions people ask
Do small Nigerian companies need transfer pricing documentation?
Groups whose controlled transactions total less than ₦300 million are exempt from contemporaneous documentation, but they must still price at arm's length and file the declaration and disclosure. If the tax authority asks, documentation is due within 90 days.
When is the TP declaration due in Nigeria?
Grant Thornton's summary says the TP declaration and disclosure are filed alongside the company income tax return, which is due six months after year end or 18 months after incorporation if earlier.
What is the penalty for not having TP documentation?
Professional summaries give the higher of ₦10 million or 1% of total controlled transactions, plus ₦10,000 a day while the failure continues.
Does transfer pricing apply between two Nigerian companies I own?
Yes. PwC notes the rules cover domestic as well as cross-border transactions between connected persons.
Sources
- PwC Worldwide Tax Summaries, Nigeria: Group taxation (reviewed 29 May 2026) · accessed Oct 2026
- KPMG Nigeria, Newsletter on Nigeria's revised Transfer Pricing Regulations (2018) · accessed Oct 2026
- Grant Thornton, Transfer pricing: Nigeria (1 Jan 2025) · accessed Oct 2026
- PwC Worldwide Tax Summaries, Nigeria: Corporate tax administration (reviewed 29 May 2026) · accessed Oct 2026
- HMRC International Manual INTM412090 (updated 20 Oct 2026) · accessed Oct 2026
- IRS, Transfer pricing (reviewed 27 Feb 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.