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17 April 2018

Zambia publishes Transfer Pricing (Amendment) Regulations 2018

The Zambian Transfer Pricing (Amendment) Regulations 2018 (the 2018 regulations) were published in the Government Gazette on 6 April 2018, under Statutory Instrument No. 24 of 2018. The 2018 regulations govern transfer pricing transactions between related entities as well as documentation requirements.

The draft regulations issued in October 2017 have now been gazetted as The Transfer Pricing (Amendment) Regulations 2018.1 The 2018 regulations are applicable to residents of Zambia, as well as permanent establishments of nonresident companies. The 2018 regulations provide definitions of key terms, guidance on the contemporaneous documentation requirements and outline approved transfer pricing methods, among other topics.

The 2018 regulations are to be considered in light of the Organisation for Economic Co-operation and Development Guidelines on Transfer Pricing for Multinational Enterprises and Tax Administrations as well as the United Nations Practical Manual on Transfer Pricing for Developing Countries.

Notable changes from the draft regulations issued in 2017 include the following:

  1. The ZMW20 million (approx. US$2.1 million) threshold will not apply to multinational enterprises (MNEs), effectively rendering all MNEs subject to transfer pricing requirements.
  2. A new provision for taxpayers to submit certified translations of all transfer pricing documentation that is not prepared in English.
  3. A 30-day period in which to provide requested documentation (as opposed to the initial 14 day period published in the 2017 draft regulations). Failure to do so will render an entity liable to the penalties prescribed under the Income Tax Act. This may include a fine not exceeding 10,000 penalty units or imprisonment for a term not exceeding 12 months, or to both. The draft regulations provided for a penalty of ZMW500,000 (approx. US$50,000).

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ENDNOTE

1 See EY Global Tax Alert, Zambia to issue revised transfer pricing regulations, dated 29 November 2017.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

EY Advisory Services Limited, Lusaka

  • Patrick Mawire
    patrick.mawire@zm.ey.com
  • Tetiwe Moyo
    tetiwe.moyo@zm.ey.com

Ernst & Young Advisory Services (Pty) Ltd., Africa ITS Leader, Johannesburg

  • Marius Leivestad
    marius.leivestad@za.ey.com

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

  • Rendani Neluvhalani
    rendani.mabel.neluvhalani@uk.ey.com
  • Byron Thomas
    bthomas4@uk.ey.com

Ernst & Young LLP, Pan African Tax Desk, New York

  • Silke Mattern
    silke.mattern@ey.com
  • Dele A. Olaogun
    dele.olaogun@ey.com
  • Jacob Shipalane
    jacob.shipalane1@ey.com

Ernst & Young LLP, Pan African Tax Desk, Houston

  • Elvis Ngwa
    elvis.ngwa@ey.com

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ATTACHMENT

PDF version of this Tax Alert

Document ID: 2018-5545

 
 

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