Transfer pricing and developing countries

Nowadays it is estimated that 2/3 of business transactions worldwide take place within multinational enterprises. This is not without posing challenges when considering how these transactions are costed and subsequently taxed. This issue is usually designated under the generic term "transfer pricing". The question is particularly valid for developing countries where administrative capacities are usually weak.

The present study commissioned by the European Commission and carried out by PriceWaterhouseCoopers explores ways to improve the regulatory framework and/or enhance its enforcement specifically in developing countries and considers how donors may support them in this perspective. It builds on recent OECD guidelines and UN manual dealing with transfer pricing but also looks at preconditions that should be in place before engaging in such sophisticated reforms in developing countries. For that purpose it uses four country examples: Ghana, Honduras, Kenya and Vietnam.