Rwanda: Transfer pricing rules
Rwanda: Transfer pricing rules
Rwanda’s Minister of Finance and Economic Planning issued a ministerial order—No. 003/20/10/TC—establishing general rules for transfer pricing between related persons involved in controlled transactions.
These transfer pricing rules impose new transfer pricing compliance and documentation obligations on taxpayers, as follows:
- Taxpayers with an annual turnover greater than FRW 600 million (approximately U.S. $604,000) or having substantial controlled transactions (defined by reference to greater than FRW 10 million per transaction or an aggregate value greater than FRW 100 million) must prepare detailed transfer pricing documentation to evidence the arm’s length nature of the controlled transactions.
- Transfer pricing documentation must be in place before the taxpayers file their annual tax declarations (returns). On request by the tax administration, taxpayers have seven days to turn over this documentation. As a general rule, the tax administration has the authority to conduct a transfer pricing audit for a period going back five years.
- The transfer pricing rules apply to both domestic and international related-party transactions between related persons. Taxpayers that have domestic transactions with related parties operating under preferential tax zones in Rwanda must comply with the transfer pricing rules.
- To address harmful tax practices and tax base erosion, transactions between independent parties also fall under the transfer pricing rules—particularly when the transactions are undertaken with parties based in “beneficial tax jurisdictions.”
- The median point of a benchmarking study is to be used as the reference point for transfer pricing adjustments, when the pricing of a transaction falls outside the arm’s length (interquartile) range.
- The transfer pricing rules introduce the requirement to file a country-by-country (CbC) report not later than 12 months after the last day of the reporting fiscal year, when the ultimate parent company of the multinational enterprise is required to prepare a CbC report.
- Controlled transactions involving a person that does not control the risks or does not have the financial capacity to assume the risks associated with a transaction, are not to be allocated the profits associated with those risks.
- The transfer pricing rules apply to both domestic and international related-party transactions between related persons. Taxpayers that have domestic transactions with related parties operating under preferential tax zones in Rwanda must also comply with the transfer pricing rules.
Read a 2021 report [PDF 565 KB] prepared by the KPMG member firm in Rwanda
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