Transfer Pricing

What is Transfer Pricing?

Transfer Pricing refers to the setting, analysis, documentation, and adjustment of cross border charges made between related parties for goods, services, or use of property (including intangible property).

Transfer Pricing in Namibia

Namibia introduced transfer pricing legislation (Section 95A of the Income Tax Act) on 14 May 2005. The legislation is aimed at enforcing the arm’s length principle in cross-border transactions carried out between connected persons. During September 2006, the Directorate of Inland Revenue issued Practice Note 2 of 2006 (PN 2/2006) containing guidance on the application of the transfer pricing legislation.

Documentation requirements in Namibia

Paragraph 8 of PN2/2006 requires that a taxpayer be in possession of transfer pricing documentation. The taxpayer must be able to demonstrate that they have developed a sound transfer pricing policy in terms of which transfer prices are determined in accordance with the arm’s length principles.

Thin capitalisation

Section 95A deals with thin capitalisation and prescribes that the Minister may, where financial assistance provided by a foreign connected person is excessive in relation to a company’s fixed capital, disallow (for tax purposes) any interest or other charges payable by the Namibian person on the excessive portion of the financial assistance provided by the foreigner.

Complete Transfer Pricing solution

Transfer Pricing has emerged in Africa and the global economy as one of the most important tax issues for multinational companies. Managing Transfer Pricing risk and maximizing efficiency opportunities through pricing planning are both key shareholder and value issues. The PwC Global Transfer Pricing Group, consisting of over 600 dedicated transfer pricing specialists with advanced training in economics, accounting, project management and law, will work with you to develop a strategy to meet your global business goals and objectives. Our combined experience enables us to develop innovative approaches for an expansive list of clients, from high growth entrepreneurs to established market leaders, in a wide range of industries. Through our expertise, we have created a set of transfer pricing services to assist you in achieving your strategic global business objectives. Our Global Transfer Pricing Group will help you turn a global problem into a global solution

PwC Namibia can assist with the following:

Health checks - Transfer Pricing

PwC’s Transfer Pricing planning advice includes health checks to identify risks and analyse priorities and develop policies.

Performing a Transfer Pricing health check involves a detailed review of a group’s transactions to determine the nature of transactions between cross-border related parties. Our report will highlight the transfer pricing risks which the Namibian company is exposed to.

Compliance and document management

Effectively and efficiently documenting and benchmarking intra-group transfer pricing policies and practices is becoming increasingly important for multinational corporations seeking to protect the group from revenue authority scrutiny and potential adjustments and penalties. Coupled with this is the need to simplify the collection of data to ensure greater efficiency in the preparation of supporting transfer pricing documentation. Profiled below are some of the various ways PwC assists organisations in the simplification of compliance and document management.

Global core documents

Global core documentation (GCD) is a methodology that leverages off the development of base documentation for the group to provide an efficient global solution to the problem multinationals face in meeting the transfer pricing documentation requirements of numerous countries.

Addendums to global core documents

By leveraging off base documentation, PwC can provide an efficient and cost effective solution by drafting an addendum to the global core documentation to ensure compliance with Namibian Transfer Pricing legislation.

Stand-alone Transfer Pricing policy documentation

PwC can assist with the preparation of a stand-alone Transfer Pricing policy, to demonstrate that the entity has developed a sound transfer pricing policy in terms of which transfer prices are determined.

Training on Transfer Pricing

PwC can provide Transfer Pricing awareness training in a Namibian context.

We can help answer the following questions:

  • Do the Namibian Transfer Pricing rules apply?
  • What effect will those rules have?
  • What options are available to the entity?
  • What implications do those options have?