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Authors:
Adegboyega, Adewale Nurudeen, Dr. Ogbebor, Peter I, Dr. Lawal, Esther, Nigeria
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Abstract:
With Nigeria's abundant natural resources the control of a substantial
portion of oil production by multinational corporations (MNCs) raises concerns
about transfer pricing manipulation. Part of revenue leakages of the government
in Nigeria which are needed to boost economic growth can be attributed to tax
evasion practices by MNCs through their transfer pricing activities. Studies
that focused on tax evasion practices of MNCs such as sharp practices in the
area of transfer pricing practices in Nigeria are scarce. This study examined
the effect of multinational corporations transfer pricing policies, corruption
and economic growth in Nigeria from 1986 to 2022. The study adopts an ex-post factor research design,
utilizing an autoregressive distributed lag modelling and bound testing
cointegration as the estimation techniques. The inferences were made at 5%
significant level. The inferences were made at 5% significant level. The
findings revealed that domestic non-oil revenue shows a significant and
positive effect on Gross Domestic Product, suggesting a potential positive
association between domestic non-oil revenue and Gross Domestic Product over
the long term. In the short run lagged differences in Gross Domestic Product
exhibit a positive and marginally significant coefficient, suggesting a
persistence effect. In conclusion, in the examination of transfer pricing
policy on Gross Domestic Product, the long-run estimates reveal a significant
effect of transfer pricing on Gross Domestic Product (Adj. R2= 0.229, F (4,37)
= 30.94, p< 0.05)), The study concluded that transfer pricing
contributes valuable insights to the on economic growth in Nigeria. The study
recommended that policy maker should center on promoting transparency and
fairness in multinational corporations' transfer pricing practices through the
implementation of stringent regulations and monitoring mechanisms,
collaboration between domestic and international tax authorities to detect and
deter potential manipulations, and the fostering of international cooperation
to establish standardized guidelines, aiming for an equitable and consistent
approach across jurisdictions.
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