ALTERNATIVE DISPUTE RESOLUTION AND TRANSFER PRICING IN NIGERIA

Abstract

Transfer pricing disputes which are driven by the rise in cross-border transactions and aggressive enforcement by tax authorities, are increasingly becoming critical issues in Nigeria's evolving tax landscape. However, the litigation route for resolving such disputes remains arduous, expensive, and time-consuming. As global tax systems evolve, there is a growing recognition of the need for more efficient dispute resolution mechanisms. Thus, this paper explores the viability of Alternative Dispute Resolution (ADR) as a more efficient, flexible, and cost-effective mechanism for resolving transfer pricing controversies in Nigeria. Drawing on comparative experiences from jurisdictions such as United Kingdom, South Africa, and the OECD frameworks, the paper evaluates Nigeria's existing legal and institutional frameworks for tax-related ADR, including its applicability to complex pricing matters. It further analyses the benefits and limitations of tools such as mediation, arbitration, and advance pricing agreements (APAs), while highlighting the legal reforms and capacity building needed to make ADR a practical reality. Ultimately, the paper argues that embracing ADR could decongest the courts, promote timely dispute resolution, and enhance investor confidence, positioning Nigeria more favorably in the global tax environment. The paper concludes with policy recommendations aimed at mainstreaming ADR into Nigeria's transfer pricing dispute resolution regime.