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Transfer Pricing Audit Challenges and Dispute Resolution Effectiveness in Developing Countries with Specific Focus on Zimbabwe

Author

Listed:
  • Sebele-Mpofu Favourate Yelesedzani

    (Accounting, Faculty of Commerce, National University of Science and Technology, Bulawayo, Zimbabwe)

  • Mashiri Eukeria

    (Accounting, Auditing & Income Tax, University of Namibia, Windhoek, Namibia)

  • Korera Patrick

    (Accounting, Faculty of Commerce, National University of Science and Technology, Bulawayo, Zimbabwe)

Abstract

Base erosion and profit shifting activities of multinational enterprises (MNEs) have been a hot issue globally. Topical among the strategies employed by MNEs has been the issue of transfer pricing (TP). Developing countries are argued to be significantly affected by TP manipulation resulting in substantial tax revenues being lost. As a response to curb the unfavourable impacts of transfer mispricing, most developing countries have adopted the OECD TP guidelines and enacted TP legislation to regulate TP activities. The arm’s length principle is the core of TP legislation, yet it has brought challenges for tax administrators and their auditors in enforcing and assessing compliance respectively leading to disputes. In view of the ever-changing business world and continuous efforts by MNEs to minimise their tax obligations through income shifting, it was imperative to assess the factors affecting the effectiveness of TP audits and dispute resolutions as measures to enhance compliance and enforcement in developing countries, with specific reference to Zimbabwe. Findings include the lack of clarity in TP legislation, resource constraints and complexity of transactions, lack of expertise as well as the shortage of comparable data. Developing countries are encouraged to formulate clear TP regulations and invest in the capacitation of revenue authorities.

Suggested Citation

  • Sebele-Mpofu Favourate Yelesedzani & Mashiri Eukeria & Korera Patrick, 2025. "Transfer Pricing Audit Challenges and Dispute Resolution Effectiveness in Developing Countries with Specific Focus on Zimbabwe," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 15(2), pages 223-269.
  • Handle: RePEc:bpj:aelcon:v:15:y:2025:i:2:p:223-269:n:1003
    DOI: 10.1515/ael-2021-0026
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    More about this item

    Keywords

    transfer pricing; audit; dispute resolution; comparable data; effectiveness;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • B20 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - General
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination

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