The Tax Administration (Transfer Pricing) Regulations, 2018 require a person who has transactions with associates to prepare contemporaneous transfer pricing documentation
In this first of a series of tax tips, we highlight the key contents required when preparing transfer pricing documentation.
- The Tax Administration (Transfer Pricing) Regulations, 2018 require a transfer pricing documentation to be submitted with the income tax return for a year of income by a person whose total transactions with associates amounts to or is above ten billion Tanzanian shillings.
- It should also be prepared before the date for filing the return of income for the year of income and should be provided to the tax authority within 30 days when requested for other persons with total controlled transactions of less than ten billion Tanzanian shillings.
- Non-compliance with transfer pricing documentation requirement attracts a penalty of not less than 3,500 currency points.
Below are the tips of what should be included in the transfer pricing documentation:
1. Organizational structure-covering group and operational structure, roles and shareholding %.
2. Nature of the business/industry and market conditions.
3. Description of the controlled transactions-covering volumes and values involved.
4. Strategies and assumptions that influences setting of pricing policies.
5. Computations workings to establish transfer prices.
6. Functions performed, assets used and risks assumed by persons to the controlled transaction.
7. Comparability analysis.
8. Selection and application of the transfer pricing method, tested party and the financial indicator; financial statements for the parties to the controlled transaction-to include where tested party has been selected from outside the country.
9. Documents supporting/referred in establishing transfer pricing analysis.
10. Index to document.
11. Attach any other information, data/document deemed relevant.
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