The African Minerals Development Centre (AMDC) together with the Minerals and Energy for Development Alliance (MEfDA) and the World Bank, has delivered the first of two regional workshops on transfer pricing in Africa’s mineral sector.The first workshop was successfully held from 13-16 March 2017, and included senior decision makers from tax administration authorities, revenue agencies, and ministries of finance and mines.
Charles Akong of AMDC noted that “transfer mispricing represents one of the key issues which contribute to African countries missing out on the full benefits of their minerals”. Indeed, ensuring that transactions between multinational mining companies and their affiliates are conducted as independent entities through applying the arm’s length principle remains a key challenge facing tax administration authorities across the continent.
As part of follow up activities to implement the recommendations of the landmark African Union High Level Panel on Illicit Financial Flows which was led by President Thabo Mbeki of South Africa, participants were equipped with critical knowledge of the complexity of transfer pricing issues and illicit flows that occur along the mineral value chain and through global mineral production and trade.
The workshop focused on skills to assess, prioritize and audit risks associated with transfer pricing. Participants also examined proactive measures to protect tax bases from being eroded and undermined by tax avoidance and illicit profit shifting practices by mining companies.
Both workshops have been placed within the context of AMDC’s support to countries to implement the Africa Mining Vision, the continental framework to reform and transform the sector to ensure greater mobilization of domestic revenues along the entire value chain. The Vision aims to create a ‘transparent, equitable and optimal exploitation of mineral resources to underpin broad-based sustainable growth and socio-economic development’. In accordance with the forward-looking framework, the AMDC works to support governments to strengthen their fiscal governance in ways that curb illicit financial outflows from the sector.
The four-day intensive training in Dar es Salaam drew on the Transfer Pricing Source Book developed by the World Bank and MEfDA as well as the work on fiscal harmonization and illicit financial flows in the minerals sector in Africa undertaken by AMDC. The forthcoming second workshop will be geared towards Francophone and Lusophone countries.