The 2012 Africa Tax Academy and Transfer Pricing in Africa

The 2012 Africa Tax Academy took place in Nairobi, Kenya, from 9 to 11 July 2012, followed by a client breakfast with presentations by KPMG professionals from different jurisdictions on 12 July 2012.

Approximately 80 delegates attended the conference from countries such as Kenya, Nigeria, South Africa, Uganda, Rwanda, Sierra Leone, DRC, Malawi, Zambia, Botswana, Ghana, Tanzania, but also from Germany and Switzerland.

This year’s theme was “Oil and Gas/Mining in Africa”, however it transpired that, given the focus on transfer pricing in Africa, the delegates had also a strong interest in the latest transfer pricing developments globally and in Africa.

Accordingly, four of the presentations dealt with transfer pricing, and the topics are set out below:

  • “Latest OECD/UN developments and Africa transfer pricing developments” (KPMG South Africa)
  • “New entrants into the transfer pricing Arena” (KPMG Uganda)
  • “Legislation versus Practice” (KPMG Kenya)
  • “The use of databases in Africa” (Bureau van Dijk Kenya)

Observations:

  • Countries all over Africa appear to be considering the introduction of new, or the enhancement of existing transfer pricing rules
  • Tax administrations in Africa have learned from past mistakes and there is a general trend to up skill staff with a view to focus on transfer pricing
  • The OECD Transfer Pricing Guidelines are accepted in most countries where transfer pricing is enforced
  • The African Tax Administration Forum (ATAF) has formed a transfer pricing group (subscribed to by 34 out of 56 countries) and is providing training and support to countries in Africa
  • APAs currently only available in Uganda, but other countries considering (eg Nigeria draft, but without clear roll-back provision)
  • After a long period of re-focusing, the Kenya Revenue Authority has reviewed transfer pricing documentation for 200 taxpayers of which none has been accepted without a query
  • Many countries require taxpayers to maintain transfer pricing documentation, eg Kenya, Uganda, Namibia
  • The issue remains that there are basically no suitable local comparables in Africa, but it seems that many tax administrations accept Bureau van Dijk Orbis Global etc
  • South Africa, Kenya and Malawi have apparently subscribed to Bureau van Dijk Orbis Global
  • KPMG South Africa is the first firm to have obtained a Bureau van Dijk Orbis Global licence to perform database searches across the continent for all African countries.
David Okwara

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