Andrew Opuni-Ampong, Managing Partner, Deloitte & Touche, on transfer pricing regulations

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Andrew Opuni-Ampong, Managing Partner, Deloitte & Touche


Ghana has seen growth in the number of multinational organisations operating in all sectors. There has been a consequent rise in the volume and variety of intercompany transactions for intra-group services such as royalties, debt financing, management and technical services. New transfer pricing (TP) regulations have thus been introduced to provide guidance to taxpayers and to protect the country’s tax base.

“Related-party transactions” are fixed at a price, thereby giving rise to the concept of TP, which describes the process of setting prices by related parties for the transfer of physical goods, intangible property and services, among themselves. Although it has been established that there are various rationales for intragroup TP and that the concept is right, the practice could be subject to abuse and therefore raises a number of major concerns for tax authorities.

The TP regulations require taxpayers to demonstrate that all transactions between them and their related entities are carried out at arm’s length, i.e. the profits earned by each entity in a transaction among related parties are consistent with those which would have been earned by independent or unrelated entities under similar circumstances. The objectives of the regulations include preventing erosion of the tax base and profit shifting, ensuring clarity and reducing the risk of double taxation, among others.

SCOPE OF THE REGULATIONS: As stated above, there is a plethora of intra-group transactions which could give rise to TP abuse. The regulations thus cover all forms of transactions between connected taxable persons including: the purchase and sale of goods; the purchase, sale and lease or use of tangible and intangible assets; the provision of services; and the provision of finance. The list above is not exhaustive, however, as the provisions are designed to be flexible and cover other forms of transactions not envisaged, provided they affect the profit or loss of the taxpayer.

DOCUMENTATION REQUIREMENTS: Entities that have become engaged in related-party transactions are required to demonstrate compliance with the arm’s length principle by maintaining detailed contemporaneous documentation of all the transactions conducted or engaged in by the entities for each tax year. The Regulations and the Practice Notes on Transfer Pricing that were recently released by the Ghana Revenue Authority (GRA) provide guidelines.

The regulations require taxpayers to file transfer pricing returns in accordance with section 72 of the Internal Revenue Act, 2000 (Act 592) with a form to provide the following information: the method(s) used to establish the transfer prices; calculations made and price adjustment factors considered necessary for the purpose of achieving comparability; any arm’s length range determined; brief description of the taxpayer’s organisational structure – showing all related entities (including all foreign affiliates); description of the nature of business in which the relevant transaction took place, the property used and the extent of any other relationship; details of all related-party transactions entered into, including any contracts or agreements; strategies and policies applied to ensure that the transaction is at arm’s length; identity of the entity and its relationship with other entities in the controlled relationship; details of the principal business activities of each entity in the group and the business relationship among the associated entities; and the information on the group financial statements.

THE WAY FORWARD: The regulations impose additional compliance obligations and it is therefore expedient for companies to which they apply to proactively consider taking measures that will address the likely impact on their activities. This includes reviewing business processes to determine and identify TP transactions and developing an appropriate TP policy.

The latter shall take into consideration the company’s structure, comparable benchmark TP transactions, provisions of the applicable local laws and double tax agreements, and the restructuring of identified TP transactions to ensure compliance with the TP policy.


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