MULTINATIONAL ENTERPRISESAND TAX AVOIDANCE IN NIGERIA

The growing internationalization of economic activities has given rise of recent to taxation problems in the sphere of international investment. In a developing country like Nigeria, multinational business transactions usually take place between members of the group such as the sale of goods, the provision of services, the licensing of patents and know – how, the granting of loans and so on. It is an open secret that tax factors affect the prices charged for such transfers which are usually not at arm's length prices. The multinational or trans-national corporations adopt transfer prices which are not arm's length prices in order to minimise tax. This can be done for example, either by selling goods to a subsidiary in a tax haven at less than arm's length prices or by a parent company overpricing its exports to foreign subsidiaries so that by inflating the-cost of imports of the final product or raw materials, a corporation can increase the margin of profit which of course will be concealed for tax purposes.