Across the globe, countries are continuously updating and enhancing local Transfer Pricing (“TP”) rules and aligning them to the OECD Guidelines.  Today, we explore some of the recent developments in the TP world, particularly in Ireland, Mauritius and Zimbabwe.

And just for you, for each country, we’re including a video we made earlier summarising the issues.

Ireland

In Ireland, we already have comprehensive annual TP Documentation requirements for large multinational enterprises (MNE’s) which meet the EUR 50 million Group Turnover threshold.  Interestingly, there are no transaction thresholds, so if you meet the MNE threshold, expect your documentation to be heavy and complex. Perhaps more interestingly for the bulk of Irish taxpayers, recently the Irish revenue authority announced an extension of these rules to cover Irish Small and Medium Enterprises (“SMEs”).  In summary, the rules will require SME’s to prepare a simplified version of a Local TP File, covering the relevant transactions (typically transaction categories exceeding EUR 1 million).  Regardless of the level of documentation rules or thresholds, given the onus is on the taxpayer to evidence the arm’s length nature of the transactions, there is really no getting around ensuring a minimum level of technical TP support available at the very least.

At Regan van Rooy, we recently ran a webinar, “All You Need To Know About Transfer Pricing in Ireland”, click on the video below for further details.

Zimbabwe

Like many other African countries, Zimbabwe is continuously enhancing its TP legislation and working to better monitor compliance. Just recently, the Zimbabwean Revenue Authority (“ZIMRA”) introduced a new TP return submission requirement, in addition to the TP documentation rules. These rules require Zimbabwean taxpayers to submit the TP return along with the corporate income tax return by 31 August 2022. Furthermore, the TP Documentation should be prepared by the time the tax and TP return are submitted and must be made available upon request to ZIMRA within seven days. God may have built the world in that time, but it’s not very long for us mere mortals to build a TP document.

The above was covered in detail in our recent webinar “All You Need To Know About Transfer Pricing in Zimbabwe”. Click on the link below for further detail.

Mauritius

A couple of years ago, the Mauritian Revenue Authority (“MRA”) introduced the country-by-country report (“CbCR”) rules, which align with the OECD Guidelines. The CbCR rules apply to MNE with a consolidated revenue of at least EUR 750 million and is due for submission within 12 months after the end of the reporting fiscal year. As only a handful of lucky clients meet this threshold, most of us are more likely concerned about wider TP risks and requirements. Although the preparation of TP documentation is not legislated in Mauritius, it is likely pending, and certainly best practice. More importantly, the risk of double taxation and the corresponding tax jurisdiction tends to be where the bulk of the true TP risk can materialise. 

See our recent seminar below “All You Need To Know About Transfer Pricing in Mauritius”. Click on the link for further details.

TP controversy

There is no playbook for transfer pricing disputes, and each case should be managed on its merits and according to the rules in each country. However, understanding the potential pitfalls, exposures, and how best to tackle, strategise and negotiate tax authority challenges is key for multinational businesses. Come help us unpack this topic in our upcoming webinar “All you need to know about Controversy Africa”, which will be led by our own Geoff Morris (ex-Australian tax authority, competent authority, and controversy expert, and Keith Engel (CEO of the South African Institute of Tax). Please click on the link below to book your free ticket.

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Conclusion

If your pulse rate has quickened from reading any of the above, please reach out to our panel of experts for any questions you may have regarding the above or any other TP, international tax, or structuring matter.

How can we help?

How you structure your business is a critical question as you expand globally.  The right structure will protect your assets, improve your currency position, support your business operations, facilitate future business expansion and changes, and optimise your overall tax rate. Trying to unscramble a sub-optimal structure entered into in haste or without full consideration of relevant facts is complex and expensive, so it’s important to plan upfront.

Structuring an international business is both a science and an art – this is our specialist area of expertise. Regan van Rooy is an international tax and structuring advisory firm focussing on Africa. We have offices in South Africa, Mauritius and Ireland and we can help you with any international tax or structuring query.

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