ZAMBIA Law and Practice Contributed by: Mulenga Chiteba, Constance Namatai Mwango and Bwalya Milunga, Mulenga Mundashi Legal Practitioners
9.2 Arm’s Length Principle Zambia’s Transfer Pricing Rules do not depart from the arm’s length principle. 9.3 Impact of the Base Erosion and Profit Shifting (BEPS) Project The OECD’s BEPS project influenced amend - ments to Zambia’s Transfer Pricing Rules. Zam - bia joined the Inclusive Framework on BEPS and in 2020 an amendment was introduced to bring about country-by-country obligations to the domestic landscape, thereby fulfilling the country-by-country reporting minimum standard and implementing it into domestic law. It also worth noting that the BEPS-recommend - ed transfer pricing methods have been imple - mented. These are as listed in 3.1 Transfer Pric- ing Methods . 9.4 Impact of BEPS 2.0 Zambia has not explicitly provided a conclusive perspective on the OECD’s BEPS 2.0 initiatives. However, the country continues to introduce changes to the domestic Transfer Pricing Rules to ensure they are aligned with the OECD Guide - lines. Zambia’s joining the Inclusive Framework on BEPS in 2017 illustrates the country’s com - mitment to and participation in reducing multina - tional tax avoidance and improving cross-border tax dispute resolution. The OECD’s BEPS 2.0 initiatives involving Pillar One and Pillar Two are likely to be implemented, even though there is no definite set period for such implementation. The initiatives will likely address challenges in taxation of the digital economy in Zambia, which could lead to an increase in Zambia’s revenue growth from taxa - tion of multinational entity digital companies, and also to tax certainty.
• information and allocation schedules show - ing how the financial data used in applying the transfer pricing method may be tied to the annual financial statements of the taxpayer; • summarised schedules of relevant financial data for comparables used in the analysis; and • any other information, including information relating to the associated person that may be relevant for determination of the arm’s length price. Transfer pricing documents and records must be prepared on an annual basis. 8.2 Transfer Pricing Documentation Zambia has adopted a three-tiered structure or approach that taxpayers must adopt. The mas - ter file and local file reports are mandatory, while a country-by-country report must only be pre - pared and filed with the ZRA subject to meeting certain conditions. 9. Alignment With OECD Transfer Pricing Guidelines 9.1 Alignment and Differences Zambia’s Transfer Pricing Rules closely align with the OECD Transfer Pricing Guidelines, as they are to be construed in a manner consistent with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administra - tions as supplemented and updated from time to time. Where there is any inconsistency between the Transfer Pricing Rules and the OECD Guidelines, the Transfer Pricing Rules prevail to the extent of the inconsistency.
405 CHAMBERS.COM
Powered by FlippingBook