The Petroleum Commission is to begin a crackdown on companies engaged in transfer pricing in the country’s oil and gas sector.
Transfer pricing - generally frowned at by tax or regulatory authorities, involves the transfer of intellectual property, tangible goods, services, raw materials, loans or other financing transactions at absurd prices with the purposes of outsmarting the system or reducing its tax liabilities and undermines efforts aimed at achieving accountability in the oil & gas sector.
An example is when oil firms pays large sums of money to parent company abroad or related party offshore and consequently, reduce their tax as well as other statutory obligations to their host countries or entities.
Expressing the resolve of the institution to deal with the practice - Chief Executive of the Petroleum Commission, Egbert Faibille Jnr, who issued the warning, noted that they were aware that most foreign companies in joint venture (JV) arrangements engaged in transfer pricing.
He however pointed out that the “practice must stop so we are working with the Ghana Revenue Authority (GRA) to bring sanity in the conduct of financial transactions in the industryâ€.
Mr. Faibille reiterated that the era for such practices was over. Hence, transfer pricing must stop if they sector was to achieve its local content objectives.
“You need to let the stakeholders know the scope and broad terms of your engagement. The most critical principle in maximizing local content in Ghana is transparency,†he added.