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Transfer Pricing

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GRADomestic TaxTransfer Pricing

Transfer Pricing Unit

The Transfer Pricing Unit, established in 2013 under the Transfer Pricing Regulations, 2012 (L.I. 2188), (TPU) is a specialised office domiciled in 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 the two related parties is sometimes manipulated leading to mispricing of the goods transferred/sold to the subsidiary, thus may reduce/increase the taxable profit of the subsidiary. This practice is commonly described as transfer pricing abuse, transfer mis-pricing or base erosion and profit shifting.

Responsibilities of the TPU

The unit is charged with the responsibility of;
  • Assisting Government formulate policies to curb transfer pricing abuse and base erosion,
  • Undertaking Taxpayer education on transfer pricing laws and requirements,
  • Conducting audits into the tax affairs of Taxpayers who have had arrangements (transaction or dealings) with persons in a controlled relationship,
  • Implementing the provisions of the Transfer Pricing Regulations, 2012 (L.I. 2188) and related laws.

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.

Obligations of Persons Who Engage In A Transaction With Related Parties

The L.I.2188 requires persons who engage in a transaction/arrangement with a related party to:
  • Ensure that the transaction is conducted at ‘Arm’s length’
  • Maintain detailed supporting documents in respect of the transaction
  • File Transfer Pricing Returns (TPR) with the GRA not later than four months after the end of the involved person/party’s year of assessment.

Arm’s length Price (ALP)

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’.

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