An evaluation of the effectiveness of the income tax (transfer pricing) regulations of 2011 in curbing transfer pricing in Uganda

Abstract

There is a strong incentive for Multi-National Corporations to shift their profits from a country with a high tax regime like Uganda to another that has a favourable tax regime through transfer pricing. The purpose of this study was to evaluate the effectiveness of Uganda’s transfer pricing regulations in curbing this vice. The study used a cross-sectional design, 82 employees of Uganda Revenue Authority were the targeted sample and primary data was obtained using Self-Administered questionnaires. The questionnaires were edited for accuracy, consistency and completeness. The data was analyzed using Statistical Package for Social Sciences (SPSS). The study found that the reporting requirements imposed under regulation 7(1), penalties under Regulation 7(6) and documentation requirements imposed under regulation 8 were effective in curbing transfer pricing. However, it was recommended that there should be a mechanism to carry out monitoring and evaluation of these laws periodically so as to stop them from being circumvented or becoming obsolete.