The Zimbabwe Revenue Authority (Zimra) says the country is losing millions through transfer pricing.
BY TARISAI MANDIZHA
Transfer pricing happens whenever two companies that are part of the same multinational group trade with each other. When the parties establish a price for the transaction, this is transfer pricing.
Speaking at the transfer pricing indaba in Harare yesterday, Zimra board chairperson Willia Bonyongwe said the revenue collector was concerned about transfer pricing and illicit financial outflows although the extent of the loss could not be quantified.
“As a country and as a continent, we have lost so much in revenue owing to transfer pricing and other illicit financial activities which can eve go hand in hand with transfer pricing, tax evasion, tax avoidance, smuggling among other, but at the end of the day we have lost a lot of revenue,” Bonyongwe said.
Zimbabwe enacted new legislation on transfer pricing with effect from January 1, 2017. The new legislation endorses the arm’s length principle and imposes documentary obligations on taxpayers. Its scope includes transactions between connected persons, applying to both domestic and international transactions.
Speaking at the same event, taxation, training and transfer pricing specialist Dumisani Ngwenya said the new legislation on transfer pricing was trying to come up with a framework that “would at least try to ensure that Zimbabwe gets its fair share of tax”.
“When we are looking at transfer pricing, we are looking at the pricing of transactions between companies that are related, in Zimbabwe we call them associated persons. So, basically the tendency is if you are dealing with someone you are related to you can manipulate the price.”
According to official statistics, Africa has bridged the one trillion dollar mark in illicit outflows with 65% of this through transfer pricing. – NewsDay