The Transfer Pricing Unit, established in 2013 under the Transfer Pricing Regulations, 2012 (L.I. 2188), (TPU) is a specialised office within the Large Taxpayer Office (LTO) of the GRA and is largely accountable for setting the prices of goods, services, funds, etc. sold or transferred between parties in a controlled relationship (related parties).
For example, if a subsidiary company buys raw materials or finished goods from its parent company, the price at which the goods are sold by the parent to the subsidiary, is referred to as the ‘transfer price’.
The transfer price set between related parties is sometimes manipulated leading to mispricing of goods and/or services transferred/sold between the associated parties, and thus may reduce/increase the taxable profit of the associated parties. This practice is commonly described as transfer pricing abuse, transfer mispricing or base erosion and profit shifting.
The practice of transfer mispricing is proscribed by Ghana tax laws. Thus, the TPU is responsible for enforcing the law to curb such practices in Ghana.
Arm’s length Price (ALP) is the price at which persons who are unrelated and independent of each other will accept to pay or be paid for a transaction. In other words, arm’s length price is the price at which two unrelated and non-desperate parties would agree to a transaction. ALP is also termed as ‘fair price’ or ‘market price’.