Transfer Mispricing in Africa: Contextual Issues

Transfer pricing is a significant tax issue and lies at the core of international trade and globalisation. This brief raises contextual issues and challenges surrounding the experience of transfer mispricing in Africa. The brief comes at a time when African countries have consistently exhibited high real Gross Domestic Product (GDP) growth rates in the past two decades, and increased FDI inflows and technological upgrades have aided their high participation in global trade. Despite the profitability of MNEs operations in Africa, the investing firms are paying less in terms of tax. This has created a problem for African countries to raise their revenue base for financing development and poverty reduction programmes. Therefore it is important for Africa to stay abreast with transfer pricing rules and issues worldwide. The brief recommends the way forward for African countries in developing capacity to understand and resolve transfer pricing issues and disputes