Ghana | Transfer pricing compliance required in Country-by-Country Reporting

Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.Multinational Enterprises (MNEs) operating in Ghana that meet a particular revenue threshold are required to provide detailed, comprehensive information on their global operations through Country-by-Country Reporting (CbCR).

Definition of key terms

Multinational Enterprise Group (MNE Group): An MNE Group refers to a collection of companies or entities operating in multiple countries, often under a common ownership or control structure.

Ultimate Parent Entity (UPE): The UPE is the highest-level entity within an MNE Group that exercises control over other entities in the group. The UPE is typically the entity that consolidates the financial statements of the entire group.

Constituent Entity: A Constituent Entity is any entity within an MNE Group, excluding the UPE, that forms part of the consolidated financial statements prepared by the UPE.

Fiscal Year: A Fiscal Year refers to the annual accounting period with respect to which the UPE of the MNE Group prepares its financial statements.

Reporting Fiscal Year: The Reporting Fiscal Year is the year that the MNE's financial statements and operational results reflect in the CbCR.

Contents of CbCR

In their CbCR, MNEs must include:

• Aggregated information on revenue, profit/loss before income tax, income tax paid/accrued, stated capital, accumulated earnings, employees, and tangible assets in each jurisdiction

• Identification for each Constituent Entity, specifying tax residence, jurisdiction of organization and main business activity

• Additional information that the Commissioner-General (CG) of the Ghana Revenue Authority (GRA) may require

Who must file

An MNE Group with total consolidated group revenue of at least 2.9 billion Ghana Cedis (GHS 2.9b) in the Fiscal Year immediately preceding the Reporting Fiscal Year is required to prepare and file CbCR.

When and how to file

• CbCR must be filed in a form identical to and apply the definitions and instructions contained in Transfer Pricing Practice note DT/2021/003 (Appendix 3) issued by the GRA, dated 15 April 2021

• CbCR filings can be submitted online on the GRA taxpayer portal.

• CbCR filing with the CG shall be done not later than 12 months after the last day of the Reporting Fiscal Year of the MNE Group.

Criteria for Constituent Entity filing

A Constituent Entity that is not the UPE of an MNE Group must file a CbCR if the following criteria are satisfied:

• The entity is resident for tax purposes in Ghana.

• One of the specified conditions below applies:
  • The UPE is not obligated to file a CbCR in its jurisdiction of tax residence.
  • The UPE's jurisdiction has a current international agreement to which Ghana is a party but lacks a Qualifying Competent Authority Agreement (QCAA) with Ghana.
  • There has been a systemic failure in the UPE's jurisdiction and the CG has been notified.

Multiple Constituent Entities

MNE Groups with multiple Ghana-resident Constituent Entities can designate one entity to file, satisfying the filing for all and notifying the CG that the filing also applies for the other entities.

Consequences of noncompliance

Failure to file CbCR with the CG within the prescribed timeframe will result in:

• A spot fine of GHS 500 and an additional charge of GHS 10 for each day of default

• A risk profile performed by the GRA for increased scrutiny

• Exposure to a fine ranging from GHS 12,000 to GHS 30,000 or to a term of imprisonment of between two and five years or to both (for the company's directors)