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

Sebele-Mpofu Favourate Yelesedzani (), Mashiri Eukeria and Korera Patrick
Additional contact information
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

Accounting, Economics, and Law: A Convivium, 2025, vol. 15, issue 2, 223-269

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.

Keywords: transfer pricing; audit; dispute resolution; comparable data; effectiveness (search for similar items in EconPapers)
JEL-codes: B20 B22 E61 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/ael-2021-0026 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:aelcon:v:15:y:2025:i:2:p:223-269:n:1003

Ordering information: This journal article can be ordered from
https://www.degruyte ... journal/key/ael/html

DOI: 10.1515/ael-2021-0026

Access Statistics for this article

Accounting, Economics, and Law: A Convivium is currently edited by Reuven S. Avi-Yonah, Yuri Biondi and Shyam Sunder

More articles in Accounting, Economics, and Law: A Convivium from De Gruyter
Bibliographic data for series maintained by Peter Golla ().