Arcotia Hatsidimitris - International Tax Dialogue

8. TRANSFER PRICING AND DEVELOPING COUNTRIES – 71
Transfer pricing risk assessment in the developing world
Transfer pricing resource is both scarce and expensive for tax administrations in developing and
developed countries but this may be a more significant issue in developing countries. Developing countries
have told us that it is critical that they are able to identify effectively the highest risk cases to ensure the
most effective use of their limited resources. Risk-based case selection is also vital for creating a strong
investment climate providing certainty for business.
Chapter 2 suggests how tax administrations can best identify transfer pricing risks, what sources of
information can be useful, and how best that information can be obtained and used to influence case
selection. The examples and techniques referred to there are all relevant for developing countries but more
fundamental issues in obtaining basic information can arise.
A description by one African Tax Commissioner of their experience is set out in the box below.
Other developing countries say they face similar difficulties.
DEALING EFFECTIVELY WITH THE CHALLENGES OF TRANSFER PRICING © OECD 2012