Businesses told to adapt pending pricing rules
By MAILESI BANDA GOVERNMENT has introduced tight measures to protect Zambia from losing revenue through transfer pricing being practiced by unscrupulous companies especially in the mining sector.
And the Zambian business community has been advised to adapt to new transfer pricing regulations expected to be effected by December 31, aimed at saving the country billions of kwacha.
Before the enactment of this law Zambia has been losing billions of kwacha due to prices of goods being regulated from other countries.
The business sector has been advised to prepare for enhanced compliance requirements and disclosures around party transaction, especially since the new law could be enacted before the end of the year.
According to Deloitte and Touche, tax director, Victor Muhundika, it is important for the business sector to embrace the changing landscape on transfer pricing regulation in Zambia to uphold business integrity.
Mr. Muhundika was speaking during a workshop on Zambia transfer pricing regulations in Lusaka yesterday
“Transfer pricing rules are Anti-Tax avoidance rules which are primarily aimed at preventing multinational groups from shifting profits from one jurisdiction to another, usually a low tax jurisdiction,” Mr. Muhundika explained.
He said the transfer pricing rules in Zambia were placing an obligation on taxpayers to keep and maintain documentation that confirm compliance with the standard on business transactions with related parties.
And Deloitte and Touche, Central African associate tax director, Cabrini McCarrick said transfer pricing should be taken seriously by the business community as it could affect the reputation of a business.
She said transfer pricing was part of corporate business adding that anything negative in relation to transfer pricing would dent the business.
The Government earlier this year made a decision to issue a draft amendment to the pricing regulations. The draft statutory instrument proposes to make transfer pricing documentation compulsory for all tax payers who have related party transactions and whose annual turnover exceeds K20 million.