The Namibian Income Tax Act (Section 95A) empowers the Receiver of Revenue to adjust the consideration paid or received in respect of an international transaction between connected persons to reflect the arm's length price for goods or services in determining the taxable income of the Namibian taxpayer.

Practice Note 2/2006 requires a taxpayer to compile a Transfer Pricing policy document setting out the basis upon which prices are set for international transactions between connected persons. This will be the taxpayer's defense in showing that a price charged between connected persons is an arm's length price (i.e. what unconnected persons would have charged under the same circumstances).

The Practice Note is primarily based on the transfer pricing guidelines provided by the Organization for Economic Cooperation and Development (OECD). The OECD has recently launched a number of initiatives aimed at improving the current transfer pricing legislation.

Simplification and clarification of current transfer pricing guidelines seem to be the area of focus for the newly appointed head of the OECD, Ms Marlies de Ruiter. The following initiatives were launched during June 2012:

OECD TP initiatives

  • OECD released a discussion draft on the transfer pricing aspects of intangibles;
  • OECD released a discussion draft on the revision of the Safe Harbours section in Chapter IV of the OECD Transfer Pricing Guidelines
  • OECD invited comments on certain transfer pricing timing issues;
  • OECD updated the Multi-Country analysis of Existing Transfer Pricing Simplification Measures.

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