INTERNATIONAL TRANSFER PRICING AND TAX DISCLOSURE ON MULTICULTURAL COMPANIES IN NIGERIA
Abstract:The study examines the effect of transfer pricing on tax consideration of multicultural companies in Nigeria. It specifically examined the effect of tax expenses, tunneling incentive as well as foreign exchange exposure on tax disclosure of Multicultural companies in Nigeria. The study adopted an ex-post-facto research design and secondary data was gathered to analyze the relationship between the variables. Purposive sampling technique was used to select 76 Multicultural companies in Nigeria. Data for the study were gathered from annual reports of selected firms for the period of 11 years (2010-2020) and analyzed using Generalized Method of Moments (GMM) estimator. Panel data was used which consists of 760 observations analyzed using multiple regression model. Robust regression model was employed to test the effect of transfer pricing and tax consideration. The Hausman test result revealed that tax expenses and tunneling incentives have positive and significant effect on tax disclosure with coefficient of 0.0352 and 0.1282 which is significant at 5% (p=0.005,0.039) respectively, foreign exchange exposure has negative and significant effect on tax disclosure with coefficient of -0.0935 which is significant at 5% (p=0.248). The study therefore, concluded that transfer pricing have strong statistical relationship with tax consideration of selected multicultural companies in Nigeria. The study recommends that non-controlling interest, foreign exposure and debt ratio are important variables to consider when the management of selected multicultural companies in Nigeria decides on tax disclosure.