Transfer Pricing Experts Conduct MEFMI e-learning Course

Abusive transfer pricing practices are considered to pose major risks to the direct tax base of many countries and developing countries are particularly vulnerable given the large share contributed by corporate tax to revenues. Moreover this risk is exacerbated in the case of many resource rich developing countries. Past studies commissioned by the World Bank Group and the Natural Resource Governance Institute suggest that most countries in Africa do not have the requisite capacity to implement effective transfer pricing rules pertaining to the mining sector, even if they have transfer pricing legislation in place. For MEFMI member countries whose tax bases remain narrow, the opportunity to detect and audit cases involving transfer mispricing would be a welcome development for boosting domestic resource mobilisation efforts. However, transfer pricing administration requires specialised technical expertise, which capacity is not readily available in the region. In response to the identified capacity gap, MEFMI offered an online course on Fundamentals of Transfer Pricing from 28 October to 29 November 2019.

The course mentoring was done by transfer pricing experts, namely Dr. Alexander Ezenagu, Mr. Ignatius Mvula and Ms. Kalale Mambwe.

The main objective of the course was to strengthen capacity in the theoretical and practical aspects of transfer pricing with focus on the extractive industry. Specifically, the course aimed to help participants to:

• Explain the concept of transfer pricing and be aware of the global developments on transfer pricing like the OECD Transfer Pricing guidelines, and the Action Plan on Base Erosion and Profit Shifting (BEPS),
• Understand the arm’s length principle, the concept of comparability and the transfer pricing methods according to international guidelines,
• Understand the practical implementation of transfer pricing regimes in developing countries, especially in the extractives industry, and
• Understand the stages of the mining cycle and identify transfer pricing risk areas at various stages of the mining supply chain.

The course attracted participation from the Ministries of Finance, Revenue Authorities and Central Banks; and a total of 31 participants (20 male and 11 female) completed the course. As a key outcome, MEFMI anticipates that these participants will use the knowledge and skills gained from the course to effectively administer transfer pricing regimes in their countries, most of whose transfer pricing regulations have only been enacted recently (over the past two years).