Zambia Transfer Pricing (Amendment) Regulations 2018 gazetted
IBFD,Report from Pamela Chitulangoma, Principal Budget Analyst, Ministry of Finance, Zambia
On 6 April 2018, the Income Tax (Transfer Pricing) (Amendment) Regulations 2018 (TP Regulations) were published in the Government Gazette under Statutory Instrument No. 24 of 2018. The TP Regulations must be read as one with Transfer Pricing Regulations issued in 2000.
The TP Regulations are mainly aimed at providing guidance on the contemporaneous documentation requirements and regulating controlled transactions in a manner that is consistent with the arm's length principle. The TP Regulations cover the following key areas, among other fields:
–definition of key terms;
–principles of comparability;
–approved transfer pricing methods;
–arm's length range;
–services between associated parties;
–transactions involving intangible property;
–corresponding adjustments for domestic and international transactions; and
–documentation, including aspects such as:
–contemporaneous documentation requirements for controlled transactions;
–language and time frame for the submission of TP documents;
–maintenance of information by persons engaged in controlled transactions;
–discretional powers bestowed on the Commissioner General of the Zambia Revenue Authority to request additional documents; and
–applicable penalties for non-compliance.
The TP Regulations are to be construed in a manner consistent with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (OECD Guidelines), as well as the United Nations (UN) Practical Manual on Transfer Pricing for Developing Countries, as supplemented and updated from time to time. The provisions of the Income Taxation Act and the TP Regulations will prevail where there is any inconsistency with the OECD Guidelines or the UN Manual.
The TP Regulations will not apply to persons whose annual turnover is below ZMK 20 million (equivalent of USD 2,105, at the prevailing exchange rate). However, this threshold will not apply to multinational enterprises.
The TP Regulations became effective from 6 April 2018, the date of publication of Statutory Instrument No. 24 of 2018.