Tax & Accounting Blog

Should multnationals be encouraged to voluntarily disclose and comply with transfer pricing?

Global Tax Compliance, Transfer Pricing December 22, 2011

Nishana Gosai thinks so. The Manager of the Transfer Pricing Unit of the South African Revenue Service (SARS) shared his views on recent transfer pricing issues to a group of regional journalists at a recent training for the Thomson Reuters foundation. Gosai expressed the need to address the disparities for African countries concerning transfer pricing .

Current issues include an inadequate infrastructure, expertise, and legislation to deal with transfer pricing. “It is a common perception that multinationals are driven to manipulate their transfer prices to avoid paying tax or to move profits from a high tax jurisdiction to a low tax jurisdiction”, said Gosai.

As a result of this manipulation, developing countries are subjected to immense losses in revenue from industries such as mining and extraction. The international development charity, Christian Aid, estimated that approximately 60% of total capital flight from developing countries is a direct impact from current transfer pricing practices.

What can be done to close this gap? Gosai advises with business expansions in Africa, heightened scrutiny can only help this situation and ensure that developing nations can close the gaps in transfer pricing policies for multinational corporations.

Read the full article here.

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