The African Tax Administration Forum (ATAF) and the German Federal Ministry for Economic Cooperation and Development (BMZ), through the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, have developed this toolkit for African tax authorities seeking to assess transfer pricing risk in the mining industry. The purpose is to strengthen authorities’ capacity to determine whether they should audit particular high-risk “related party transactions.”

The toolkit employs a specific risk review approach, which focuses on particular transfer pricing issues that present a high risk to revenue (as distinct from a comprehensive risk review, which tax authorities use when they cannot detect where transfer pricing issues are likely to arise). A loss of even 1 percent of the value of these transactions is likely to be significant for developing country revenues. These issues are also very prevalent: many African tax authorities report corporate services, including procurement and management, as common causes of tax loss.

Authors

Alexandra Readhead

Alexandra Readhead leads the Intergovernmental Forum on Mining’s programme to address tax base erosion and profit shifting in the mining sector. Her work involves designing administrative and policy responses to some of the most pressing taxation challenges facing resource-rich developing countries. She has advised numerous governments in Africa, Asia, and Latin America on mining tax administration and tax policy. In particular, she assists with strengthening legal frameworks against abusive transfer pricing in the sector.
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