By JUDITH NAMUTOWE –

THE Zambia Revenue Authority (ZRA) has spelt out the effects of transfer pricing by multinational enterprises in Zambia and other developing countries.
ZRA commissioner general Berlin Msiska said transfer pricing led to loss of revenue by Government culminating into cutting of public services and political pressure to deal with tax policy design.
This is with the aim of obtaining a higher revenue contribution from the investments.
Mr Msiska said this when he officiated at the African Tax Administration Forum (ATAF) and United Nations (UN) workshop in Lusaka yesterday.
He said that transfer pricing further leads to possible industrial unrest as the demand for higher wages is driven by the belief that multinational enterprises   were shifting profits to other countries.
Mr Msiska said that these implications could only be addressed by enacting  framework such as transfer pricing and thin capitalisation while seeking  technical  support from developed countries  to strengthen legislation and training of staff.
“We also need to design policy in  a way that a fair share of revenue is collected without discouraging investment and enter into exchange of information agreements with other countries,” Mr Msiska said.
He said it was also important to restructure tax administrations by segmenting Domestic Taxes into Large Taxpayers Office and Medium and Small Taxpayers and further create sectorial specialisation for more focused audits.
Mr Msiska also said that there was need for technical and financial assistance to developing countries to ensure that profits were taxed where economic activities occur and value created.
“The social impact in developing countries as a result of transfer pricing should be emphasised so that the morality of certain actions is questioned,” he said.