Ghana introduces new Transfer Pricing Regulations

Introduction

The new Transfer Pricing Regulations 2020 (L.I.2412) (the “Regulation”) came into effect in November 2020 in Ghana. This Regulation replaces Ghana’s first TP Regulation, the Transfer Pricing Regulations of 2012 L.I. 2188. Whilst Ghana is not a member of the OECD, its latest transfer pricing Regulations have captured some of the BEPS initiatives. The new Regulations have been hailed as a game-changer, as they have the potential to boost transfer pricing results in many cases while also forcing multinational companies to perform additional analysis and documentation.

This article focuses on the impact of the implementation of OECD’s BEPS Action Plan on Ghana’s new transfer pricing regulation.

Value Creation of Intangible Assets

The latest Transfer Pricing Regulations provide a new criteria in deciding the arm’s-length nature of charges and fees for the use of intangible properties, in compliance with BEPS Action Items 8 - 10 Transfer Pricing, Implementation Guidance on Hard-to-Value Intangibles. The Regulations provide principles for DEMPE (development, enhancement, maintenance, protection, and exploitation) research, with the purpose of assisting in the determination of related party-controlled relationships involving intangible assets that are at arm’s length.

Business Restructuring

The new Regulations has a provision for Business Restructuring.

Country by Country Reporting

The new Regulations require that CbCR be filed for each fiscal year.

Safe Harbour Rules

The Regulations have safe harbour clauses that exempt related-party transactions from having to keep contemporaneous transfer pricing documents, specifically a Local and a Master register, in circumstances in which Taxpayers are parties to a controlled arrangement worth up to USD 200,000.

Financing Agreement

According to the new Regulations, the Tax Authorities can adjust interest on inter-company loans or loan fees to represent the amount an independent person would charge for providing the loan or credit facility in a comparable situation, based on transfer pricing regulations. Interest must also be levied on unpaid related-party trade payables after a 12-month period, according to the regulations.

Transfer Pricing Documentation

Taxpayers who engage in related-party transactions must keep track of and file the following documents with the tax authority by a specific deadline.

• Annual transfer pricing return – due 4 months after the financial year-end.
• CbCR — due 12 months after the financial year-end.

Read the WTS Global Transfer Pricing Newsletter here.