Audit firm imparts knowledge on transfer pricing

Isaac Pinielo | Thursday June 22, 2017 16:58

Senior accounts and taxation partner at Mazars Botswana, Ramnath Kadua told Mmegi Business that transfer pricing is a new topic in the country, noting that the government is contemplating on coming up with a legislation on transfer pricing.

“Until now, transactions of this nature were governed by the anti-avoidance provisions under the Income Tax Act,” he said.

Therefore, he said the envisaged legislation impacts on business practice, adding that it is important for business leaders to acquaint themselves with its provisions.

In addition, he said, business leaders should understand the implications of the transfer pricing legislation to manage non-compliance risk as well as to identify any new opportunities, which may arise as a result.

He said Mazars is on a mission to introduce the topic of transfer pricing to business leaders as many of them have operations in Botswana, South Africa and other countries in the region as well as the rest of the world.

Kadua indicated that these kinds of transactions have always been there, adding however that the level of regulation is set to increase.

“In the absence of any legislation in this respect, there always was a possibility of engagement by companies in schemes aimed at shifting of profits from a region of higher tax jurisdiction to that of a lower tax jurisdiction,” he said.

Meanwhile, the firm recently held a transfer pricing seminar, whose goal was to introduce the business community to transfer-pricing and make them aware of the steps that need to be taken by entities who transact with associated entities falling within different tax jurisdictions.

“This seminar was just an eye opener and was held to communicate the impact of the new legislation that it would have on the businesses and how one could prepare themselves well in advance in such situations in terms of maintaining proper documentations,” said Kadua.

He said the event will be followed up with other events, which are related to this topic, more especially when the new legislation is enacted. “Similar events shall also be hosted on other unrelated topics, which will be beneficial to businesses operating in Botswana,” he said. Transfer pricing refers to the price at which an undertaking transacts with its associated enterprise falling within different tax jurisdictions.