Transfer pricing and Anti-Tax Avoidance Provisions
Though the Transfer Pricing regime rules within the East African Region are just about ten years old when they were first published, the revenue authorities have already assembled a pool of sufficiently trained personnel to check transfer pricing arrangements carried out between related parties. Numerous audits have so far been carried out by the revenue offices and taxes assessed running into billons. As companies face an increasingly aggressive tax authority, the many complexities of transfer pricing provide a variety of opportunities to optimize profits, increase cash flows, and moderate taxes.
BDO East Africa Transfer Pricing Team helps businesses and their affiliates navigate the unique domestic and international tax consequences related to intercompany pricing issues. Our team provides a range of planning, compliance, audit defense, and benchmarking services. Our professionals work to develop transfer pricing policies that overall will meet the local and international tax requirements with special focus on:
- Sale, purchase or lease of tangible assets;
- The transfer, purchase or use of intangible assets;
- Provision of services;
- Lending of finances; and
- Any other transaction that may affect the profit or loss of a business.
At a global level, there has been a rapid introduction of new transfer pricing regulations from the Organisation for Economic Cooperation and Development (OECD). In Kenya all companies entering into transactions with related parties are expected to have a Transfer Price Policy document that confirms that the related party pricing is arm’s length and is supported by good quality transfer pricing documentation.
Failure to have adequate transfer pricing documentation can result in tax assessments from the revenue office that may be very tedious and costly to challenge. We can work with you to develop transfer pricing policies that are defensible, flexible and in line with your overall tax planning strategies. The revenue authorities have indicated willingness to engage taxpayers on Advance Pricing Agreements (APA) and when operationalized we will definitely engage with them to ensure certainty on transfer pricing matters.