Ghana starts auditing multinational corporations over transfer pricing
Transfer pricing is known to be one of the tools that multinationals around the world use to avoid paying taxes to countries. Experts have argued that while the practice itself is no offence, its manipulation is an offence.
In 2012 the developing countries were reported to be losing about $160 billion every year to the practice.
Ghana reportedly loses $36 million through transfer pricing in the mining industry alone. Figures for other sectors are not available.
The country has however passed a transfer pricing law to check the practice.
Ghana passed the Transfer Pricing Regulation 2012 (L.I.2188). The L.I. 2188 deals with the application of the arms length principle in transactions between connected persons and also information, documentation and penalties that will apply. The law gives greater clarity to the arms length principle contained in the Internal Revenue Act of 2000 (Act 592). It also appears to give discretionary powers to the Commissioner General of the Ghana Revenue Authority in the assessment of transactions subject to transfer pricing adjustments.
Speaking to journalists in Accra Monday November 16, 2015, Dr. Edward Larbi Siaw, the Tax Policy Advisor of the Ministry of Finance said the government is auditing some multinationals in relation to transfer pricing. He however added that, the process would be long and he did not mention any names.
Meanwhile, every year between $50 to $60 billion are illicitly moved out of Africa and activities of transnational companies make up 60 per cent of the factors that drive the activities.
While many African countries are party to several sub-regional, continental and global conventions, the region has the highest illicit financial outflows to GDP ratio, with transactions by multinational companies believed to account for 60 per cent, criminal activities 35 per cent, and corruption is five per cent.
By Emmanuel K. Dogbevi