Ghana: Transfer pricing regulations (2020)

Ghana: Transfer pricing regulations (2020)

Transfer pricing regulations for 2020 (L.I. 2412) have been issued for purposes of administering transfer pricing and related matters in Ghana.


The 2020 regulations replace the transfer pricing regulations from 2012, and generally adopt certain provisions of the OECD's base erosion and profit shifting (BEPS) recommendations and in particular BEPS Actions 4, 8, 9, 10 and 13. In addition, the 2020 transfer pricing regulations introduce certain safe harbor rules that are intended to simplify the documentation requirements of selected related-party transactions.

The effective date of the transfer pricing regulations is unknown, but the regulations have been published in the official gazette (10 August 2020).

Overview of key developments in transfer pricing regulations

Controlled transactions

The transfer pricing regulations (L.I. 2412) categorize certain related-party transactions as not being consistent with the arm's length principle based on the benefit test. These transactions include:

  • Shareholder services including (1) shareholder meetings, (2) the issue of shares, (3) stock exchange listings of the parent company, and (4) cost of supervisory board of the parent entity
  • Services rendered in relation to reporting requirements such as (1) the consolidation of reports and group financial statements, and (2) the audit of the subsidiary conducted exclusively in the interest of the parent company
  • Services performed in relation to raising funds for the acquisition of participation and investor relations of the parent company except when this participation is directly or indirectly acquired by the Ghanaian resident taxpayer and benefits or is expected to benefit the taxpayer
  • Duplicated services except when the duplication of service is only temporary and needs to achieve a reasonable business objective or undertaken to reduce the risk of taking a “wrong business decision”

Valuation creation of intangible assets

The transfer pricing regulations introduce an additional requirement in assessing the arm's length nature of charges and fees for the use of intangible assets. This requirement is in line with BEPS Action 8 - 10 Transfer Pricing, Implementation Guidance on Hard-to-Value Intangibles. The regulations incorporate principles regarding development, enhancement, maintenance, protection and exploitation (DEMPE) analysis, with an aim of helping to determine the arm's length nature of related party-controlled arrangements involving the use of intangible properties. This requirement is intended to address issues surrounding the allocation of monetary benefits to Ghanaian resident entities that enhance the value of brands through its maintenance and exploitation.

Cost-contribution arrangements

A provision of the transfer pricing regulations (Regulation 8 of L.I. 2412) requires the Commissioner-General of the Ghana Revenue Authority to consider the following conditions in determining the arm's length price for cost-contribution arrangements:

  • The contractual arrangement
  • The assets contributed by each participant
  • Risks assumed by each participant
  • The management and control of these risks
  • The financial capacity to assume the risk

This regulation is expected to eliminate ambiguities that have surrounded the transfer pricing compliance with regard to cost-contribution arrangements.

Financing arrangements

The transfer pricing regulations have detailed instances when the Commissioner-General may adjust interest on inter-company loans or loan fees to reflect the amount an independent person, in a comparable circumstance, would have charged for providing the loan or credit facility. This includes:

  • When there is no interest or loan fees charged on the loan
  • When interest is not charged on trade payables or any other credit facility that remains unpaid for 12 months
  • When interest or loan fees charged is not consistent with the arm's length standard

Business restructuring

Regulation 10 requires the Commissioner-General to consider a business restructuring arrangement between persons in a controlled relationship (pursuant to Part IV of the Income Tax Act, 2015 (Act 896)), to have satisfied the arm's length principle, if the amount received for the transfer of functions, rights, interests, assets, and risks among persons in a controlled relationship reflects the amount an independent person in comparable circumstances would pay for the transfer of those functions.

Safe harbor rules

The transfer pricing regulations (2020) introduced safe harbor rules that exempt related-party transactions from having to maintain contemporaneous transfer pricing documentation, specifically, a Local and a Master file if the following requirements are satisfied:

  • Transactions of a value less than the Ghana Cedis equivalent of U.S. $200,000 (that is, a transaction with a related party having a monetary value of less than U.S. $200,000).
  • Low value-adding services (a related-party transaction can be classified as a low value-adding service if the charge does not exceed U.S. $200,000 using actual cost plus mark-up of 3%). In determining this threshold, the Commissioner-General may aggregate two or more arrangements if satisfied that the arrangements are in furtherance of tax avoidance. Services that do not qualify as low value-adding services include: (1) services that constitute the core business of the persons in the controlled relationship; (2) research and development services; (3) manufacturing and production activities and sales; (4) marketing and distribution activities; and (5)  insurance and reinsurance.

Taxpayers that satisfy the conditions for low value-adding services as specified in the transfer pricing regulations may elect to be exempt from using the actual cost-plus-mark-up method within 30 days of entering the arrangement (by filing a notice with the tax authority).

Technology transfer agreement

Taxpayers that enter into a technology transfer agreement with related parties may elect (in writing) to be exempt from maintaining contemporaneous transfer pricing documentation when the technology transfer agreement is registered with the Ghana Investment Promotion Centre (GIPC) and the amount charged in respect of the transaction complies with the safe harbor rules. A notice of such election must be made within 30 days of entering into the agreement. The taxpayer is bound by this arrangement for a period of three years unless otherwise determined by the Commissioner-General in writing.

The acceptable range for royalties, know-how, and management or technical fees cannot exceed 2% of net profit. For these purposes, net profit is defined as earnings after interest, tax, depreciation and amortisation excluding the charge for the technology transfer.

Required documentation

Taxpayers with related-party transactions are required to maintain and file the following documentation with the tax authority by a given deadline:

  • Annual transfer pricing return –due four months after the financial year-end
  • Country-by-country (CbC) reports—due 12 months after financial year-end 

Contemporaneous documentation includes the Local file and Master file, and this contemporaneous documentation is to be filed electronically. However, the mode of electronic filing or the electronic portal has yet to be clarified by the tax authority.

The CbC report is to be filed by ultimate parent entities or constituent entities of a multinational enterprise (MNE) resident in Ghana for tax purposes. This rule, however, does not apply to MNE groups with an annual consolidated revenue of less than GH¢2.9 billion (approximately U.S. $510 million) as reported in the consolidated financial statements with respect to the fiscal year that immediately precedes the reporting year.

The required transfer pricing reports must be filed according to the following schedule:

  • Annual transfer pricing return—four months after the financial year-end
  • CbC report—12 months after the financial year-end
  • Local file—four months after the financial year-end
  • Master file—four months after the financial year-end

Penalties and interest will apply if taxpayers do not comply with transfer pricing requirements.

Read a December 2020 report [PDF 2 MB] prepared by the KPMG member firm in Ghana

For more information, contact a KPMG tax professional in Ghana:

Emmanuel Asiedu | + 233(204)322 256 |

Kofi Frempong-Kore | +233(501)324329 |

© 2022 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit

The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us