Historically, transfer pricing legislation and regulations in Africa have been limited. Many African jurisdictions have chosen to tax cross-border transactions using tools such as withholdings tax regimes, and therefore transfer pricing principles have generally taken a back seat to date, however there are signs that this is changing.
Key countries including Kenya, Tanzania and South Africa, have had transfer pricing legislation in place for some time, but others such as Botswana, Zambia, Zimbabwe, Rwanda, and Mozambique, have started implementing it for the first time.
Those with transfer pricing legislation already in place are continuously seeking to improve upon it to ensure it meets global standards.
The UN Transfer Pricing Guidelines and the UN Practical Manual on Transfer Pricing for Developing Countries (the UN Manual) provide significant value when considering transfer pricing issues from an African perspective, aiming to provide clearer guidance to developing countries.
The 2021 version of the UN Manual has a revised format, and has incorporated new content around financial transactions, profit splits, centralised procurement functions and comparability issues.
From an African perspective, the 2021 edition focuses on the country practices of both South Africa and the newly added Kenya. These country practices provide comprehensive summaries of both the legislative and, to a degree, the practical environments applicable to transfer pricing in these countries.
This shows progress. However, it is hoped that future publications will include some of the other African countries as transfer pricing legislation and regulations continue to develop and become more widely adopted.
This video will discuss the evolving transfer pricing landscape in Africa, exploring the following topics:
- How Africa continues to evolve its transfer pricing legislation aligned with international norms and precedents
- The challenges that countries in Africa face implementing UN Transfer Pricing standards including a lack of comparable data and skills shortage
- How African revenue authorities are improving their resources and skill sets daily
- Why multi-national groups looking to operate within the African environment should consider the advancements in transfer pricing legislation of late
Head of Corporate and International Tax at RSM South Africa, and Africa Regional representative of the Global Tax Leadership Group of RSM International