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Transfer pricing services in Ghana
A position you can defend, then a file that documents it.
Documentation, benchmarking and the annual return under the Transfer Pricing Regulations 2020 (L.I. 2412), for businesses with related party transactions. And, before any of that, the harder question of whether the charge itself would survive a review.
Request a transfer pricing proposal See what is includedTransfer pricing is the rule that transactions between related parties must be priced as they would have been between independent ones. In Ghana it applies more widely than most businesses expect, and it catches domestic related party transactions as well as cross-border ones.
Who this actually applies to
Not only multinationals. A Ghanaian company paying a management fee to a foreign parent is the obvious case, but so is a group of commonly owned Ghanaian companies charging each other rent, sharing staff costs, or lending between entities. If two parties to a transaction are under common control, the arm's length principle applies and an annual return is likely to be required.
Businesses are frequently caught out by arrangements they do not think of as transactions at all: head office costs absorbed without a charge, directors employed by one entity and working for another, or a shareholder loan on terms no bank would offer.
The order in which this should be done
We start by testing whether the arrangement is defensible. Documentation of an indefensible position tells the Ghana Revenue Authority exactly where to look.
Where the charge does not hold, the options are to restructure it, to reprice it, or to accept the exposure knowingly and provide for it. All three are better than discovering the problem when an adjustment lands with interest attached.
What an adjustment costs
More than the tax. A transfer pricing adjustment increases taxable profit in Ghana, and the corresponding deduction in the counterparty's jurisdiction is not automatically given, so the same profit can be taxed twice. Add interest, and add the difficulty of defending the same arrangement in later years once a position has been taken against you.
This is why the file matters. Not because filing it is compliance, but because a contemporaneous, honest, well-evidenced file is what stops an examination becoming an adjustment.
The Transfer Pricing Regulations 2020, which set the documentation requirement
The single test everything else is measured against
Typical time to a completed local file with benchmarking
Scope
From the defensibility question to the filed return
Taken as a whole or in parts, depending on whether you are starting from nothing or have a file that needs testing.
Transfer pricing risk review
A short diagnostic across all related party transactions: what exists, how it is priced, what evidence supports it, and where the exposure is concentrated. Usually the first engagement, and frequently it changes what the client thought they needed.
Local file preparation
The documentation required under L.I. 2412: functional analysis, industry and value chain description, characterisation of the parties, method selection, benchmarking and the conclusion on arm's length pricing. Written to be read by a reviewer, not to reach a page count.
Benchmarking studies
Comparable searches supporting the arm's length range for services, royalties, distribution margins and intra-group financing. Documented so that the search criteria, the rejections and the final set can all be reproduced and defended.
Annual transfer pricing return
Preparation and filing of the return alongside the corporate tax return, reconciled to the financial statements and consistent with the local file. Inconsistency between the two is a common trigger for examination.
GRA transfer pricing audit support
When an examination opens or an adjustment is proposed. Information requests, technical responses, the objection where one is required, and negotiation. Deadlines here are short, so the first call matters more than the last.
Policy design and intra-group agreements
Setting the policy prospectively rather than documenting it retrospectively: the method, the mark-up, the review cycle, and written intra-group agreements that match what actually happens.
Process
Defensibility first, documentation second
The sequence matters. A file built on an arrangement that does not hold is an expensive way to signpost a problem.
Transaction mapping
Every related party transaction, its value, its counterparty, its jurisdiction and its current pricing basis. Frequently this exercise alone identifies arrangements nobody had characterised as related party dealings.
Week 1Defensibility assessment
Would an independent party have agreed to this? Where the answer is no, we set out the options before writing anything, because restructuring is cheaper than defending.
Week 1 to 2Functional analysis
Interviews with the people who actually perform the functions, not only with finance. Who bears which risks, who owns which assets, and who does what. This is the foundation everything else rests on.
Week 2 to 3Method selection and benchmarking
The most appropriate method given the facts, then the comparable search, with the criteria and rejections documented so the study can be reproduced.
Week 3 to 5Local file
Drafted, reviewed by the partner, and issued in a form that a reviewer can follow. Then walked through with your finance team so they can defend it when we are not in the room.
Week 5 to 7Return and annual maintenance
Filed with the corporate tax return, then refreshed annually. A file that is three years stale carries less weight than no file, because it shows the position was never revisited.
AnnuallyEngagement
Fees, timing and who does the work
Fee basis
Fixed fee by phaseRisk review quoted separately from documentation. You commit to the diagnostic first and decide on the rest once you have seen what it found.Who does the work
Partner-ledMichael Siaw Larbi leads every transfer pricing engagement personally. This is judgement work and it is not delegated.Timeline
Four to eight weeksFor a local file with benchmarking. A risk review alone is one to two weeks.Sectors
Where related party exposure concentrates
Management fees, IP licensing, cost-sharing and cross-border service charges.
Intra-group funding, guarantee fees and shared service arrangements.
Trading margins, procurement through related entities and technical service fees.
Distribution margins, contract manufacturing and brand royalties.
Offtake pricing, equipment leasing and parent company charges.
Cross-border staff secondment and network fees.
Common ownership across Ghanaian entities, rent, staff and loans.
Where the parent absorbs or charges out head office costs.
Reality check
Documentation cannot rescue a charge that is not defensible
The most expensive transfer pricing mistake we see is not a missing local file. It is a management fee, a royalty or an intra-group loan that was set for group reasons and then documented afterwards, as though writing it up would make it arm's length.
- Management and technical service fees paid to a parent
- Whether a benefit was actually received, and evidence of it
- Intra-group loans, and whether the interest rate is supportable
- Royalties, and whether the underlying IP is real and used
- Persistent losses in a Ghanaian entity within a profitable group
- Cost-plus arrangements where the mark-up is unexplained
- Whether the local file matches what the group file says
Questions
Questions we are asked before the proposal
Do the transfer pricing rules apply to us?
What counts as a related party transaction?
When is the transfer pricing return due?
What happens if we have no documentation?
Can you use our group's existing transfer pricing file?
How do you benchmark when there are few Ghanaian comparables?
The GRA has proposed an adjustment. Can you help?
Is a management fee to our parent deductible?
Related
Read before you brief us
Next step
Start with the risk review, not the documentation.
One to two weeks, a fixed fee, and a clear picture of where your exposure actually sits. Most clients change what they were planning to commission once they have seen it.
Also under Tax
Corporate tax compliance and returns
Annual returns, quarterly instalments, capital allowances and the reconciliation between accounting profit and taxable profit, handled as a routine rather than as an annual emergency.
GRA tax audit and objection support
Support through a tax audit, an assessment or a demand: the correspondence, the evidence, the objection within the statutory window, and the negotiation. Deadlines here are short and unforgiving, which is why the first call matters more than the last.
VAT, NHIL and GETFund under Act 1151
VAT registration, monthly returns and the reconciliation between output tax, input tax and the ledger. Since Act 1151 took effect we have been reworking input tax positions, because the levies became claimable and most businesses are still treating them as a cost.
PAYE, SSNIT and expatriate tax
PAYE, SSNIT, Tier 3 relief, benefits in kind, bonus treatment and expatriate taxation. Payroll sits between finance and HR and frequently belongs to neither, which is exactly why officers look there first.
Exemption and incentive reviews
Tracing the basis of every benefit, exemption and concession you are applying, through the Exemptions Act 2022 (Act 1083), the applicable tax legislation and any approval that had to be given. Where the basis does not hold, we tell you before the Ghana Revenue Authority does.