Documentation Matters More Than Tax in Ghana Transfer Pricing Audits

Transfer pricing has become a critical area of tax risk for companies operating in Ghana, particularly for multinational enterprise groups and entities engaged in related-party financing or service arrangements.

The Ghana Revenue Authority (GRA) has long had the statutory authority to adjust non-arm’s-length transactions, but recent developments and audit practices show a shift towards documentation-driven compliance.

The statutory foundation of transfer pricing in Ghana is found in Section 31 and Section 124 of the Income Tax Act, 2015, and the Transfer Pricing Regulations, 2020, which expand compliance and documentation obligations.

Unlike some jurisdictions, Ghana has limited reported case law on transfer pricing adjustments, making administrative action more significant than judicial precedent in shaping enforcement.

Contemporaneous documentation is now the primary evidentiary foundation for defending transfer pricing assessments, with the GRA requiring taxpayers to maintain a Master File and a Local File for controlled transactions.

The quality of documentation is crucial, as it can lead to the rejection of pricing methodologies, substitution of alternative comparables, and the imposition of penalties and interest.

Sector-specific risk considerations, such as those in the oil and gas and financial services sectors, require robust documentation to explain value creation and benefit tests.

International best practices emphasize contemporaneous documentation, early risk identification, and penalty regimes linked to documentation failures, aligning with Ghana’s regulatory direction.

In conclusion, transfer pricing audits in Ghana have evolved into comprehensive examinations of a taxpayer’s processes and contemporaneous documentation, making the quality of documentation determinative of the audit’s outcome.

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