Evaluating Transfer Pricing Methodologies for Multinational Enterprises in Zambia: A Critical Appraisal of OECD-Compliant Approaches and Local Implementation Challenges

Victor Mwape, Munyonzwe Hamalengwa and Austin Mwange
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Victor Mwape: The University of Zambia, Institute of Distance Education, Lusaka, Zambia
Munyonzwe Hamalengwa: Professor, School of Law, Zambia Open University, Lusaka, Zambia
Austin Mwange: Lecturer, The University of Zambia, Graduate School of Business, Lusaka, Zambia

East African Finance Journal, 2025, vol. 4, issue 2

Abstract: This article undertakes a critical examination of the principal transfer pricing methodologies endorsed by the Organisation for Economic Co-operation and Development (OECD) and the United Nations (UN), focusing on their applicability within Zambia’s legal and economic environment. Specifically, it evaluates the five primary transfer pricing methods—the Comparable Uncontrolled Price (CUP), Resale Price Method (RPM), Cost-Plus Method (CPM), Transactional Net Margin Method (TNMM), and the Transactional Profit Split Method (TPSM)—in the context of Zambia’s mining-dominated economy and limited comparable market data. Drawing from the Zambia Revenue Authority’s practice guidance and supported by global jurisprudence and policy analysis, the article identifies methodological suitability, enforcement feasibility, and administrative complexity as pivotal determinants of effectiveness. The findings reveal a disproportionate reliance on one-sided approaches, limited application of CUP due to data constraints, and the underutilisation of TPSM despite its contextual advantages. The article concludes by recommending a hybridised, context-sensitive transfer pricing framework that enhances fairness, enforceability, and alignment with Zambia’s development imperatives.

Keywords: Transfer Pricing; OECD Guidelines; Zambia Revenue Authority; Comparable Uncontrolled Price; Transactional Profit Split Method; Multinational Enterprises (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:cwk:eafjke:2025-19

DOI: 10.59413/eafj/v4.i2.8

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