A new perspective: Transfer pricing and the strategic commodities industry

For nearly 20 years, transfer pricing has been subject to a lot of debate, with the Ivorian authorities seeing it as a capital flight technique. When multinational firms seek to fix a fee for their value of exchange within their group, there is the question a possible tax adjustment. This preoccupation is at the heart of the debate for several reasons, including the escalating number of controls and difficulties – both conceptual and methodological – in evaluating the price of a specific transaction. Thus, operators remain in a climate of incertitude and legal insecurity with regards to fiscal regulations. The current fiscal framework, which is based on 75-year-old legislation, seems to have become obsolete and remains incapable of responding to the challenges facing a now globalised economy.


Under Article 98 of the Uniform Act on Commercial Enterprises and Economic Interest Groups, all enterprises will have a legal personality from the date of registration at the Trade and Personal Property Credit Registry, unless the herein article stipulates otherwise. In the case of a multinational firm seeking to register as a local enterprise, it must have the legal capacity to do so. It then will have rights and is subsequently subjected to certain obligations.

However, for certain acts, the mere acquisition of legal capacity is not sufficient. In those instances, the multinational company, due to its nature as an exporter of strategic commodities affiliated with foreign-based companies, must be subject to prior official authorisation. In return for these prerogatives, the multinational company must satisfy a number of conditions.

The evolution of multinational firms within the production of strategic raw materials pushes us to classify companies based on their source or function. The agro-industrial sector, which operates within strategic raw-materials-production activities, is notorious for its disparity with regard to the origin of multinationals operating in the market. With the exception of Asia, firms from around the world are all present and OBG would like to thank Bilé-Aka, Brizoua-Bi & Associés for its contribution to THE REPORT Côte d’Ivoire 2017 compete on the market, through groups such that include CFAO, Nestlé, Olam and Cargill.


The practice of intergroup transactions has become the foremost legal method of exchanges for multinational companies. The fact that these transactions are done internally to a firm and not on the market are, of course, considered to be more efficient. The value of a certain amount of coffee or cacao fixed by a subsidiary to its mother company may legitimately vary from that of an independent firm. In a period of over-production, the exporting company may be interested in lowering prices in an effort to increase sales. During a period of shortage, it may be less inclined to sell its products to rival companies.


With regards to the tax authorities, the protection of economic public policy through the definition of a just price constitutes a matter of extreme sensitivity. In order to protect the tax authority with regards to achieving its fiscal targets, the legislature has enacted a number of rules intended to allow it to control, from an objective point of view, the declared prices of multinationals within the sector.

Competition Law No. 91-999, from 1991, includes within its first article the statement, “The price of goods and services exchanged in Côte d’Ivoire […] are determined by the framework of free competition.” In other words, for the price of strategic raw materials to be considered just, it must be established in reference to the market price, as a result of the balance between supply and demand. However, despite this well-founded reasoning, an adjustment based on this alone is limited and may be open to criticism. In this regard, an economic analysis seems more suitable as it allows the for adjustment of prices to adapt to the economic, social and commercial realities of multinationals working in the strategic raw materials sector in Côte d’Ivoire.