Nov 2019 Q3 a.
The Ghanaian Government, worried by the rising incidence of Transfer Pricing abuses by Multinational and Group Companies, introduced new transfer pricing rules and guidelines through Transfer Pricing Regulations, 2012 (LI 2188).
Required:
i) Explain any FOUR (4) objectives of the transfer pricing regulations of Ghana. (6 marks)
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- To ensure that Ghana is able to tax on appropriate taxable basis corresponding to the economic activities deployed by taxable persons in Ghana, included in their transactions and dealings with associated enterprises.
- To provide the Ghanaian authorities the tools to fight tax evasion through over or under-pricing of controlled transactions between associated enterprises.
- To reduce the risk of economic double taxation.
- To provide a level playing field between multinational enterprises and independent enterprises doing business within Ghana; and
- To provide taxable persons with certainty of transfer pricing treatment in Ghana. (Any 4 points)
ii) Explain the arm’s length principle. (2 marks)
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Arm’s length principle is the principle that the conditions of a controlled transaction should not differ from the conditions that would have applied between independent persons in comparable transactions carried out under comparable circumstances.