Unmasking Transfer Pricing Manipulation in Zambia’s Copper Mining Sector: An Analysis of Schemes, Legal Gaps, and Enforcement Challenges under the Arm’s Length Principle

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

East African Finance Journal, 2025, vol. 4, issue 1

Abstract: This article examines the pervasive use of transfer pricing manipulation by multinational enterprises operating in Zambia’s copper mining sector, focusing on the legal, institutional, and economic implications of such practices. Anchored in the arm’s length principle as articulated under the OECD and United Nations Model Conventions, the study analyzes mechanisms through which multinational enterprises circumvent tax obligations through the mispricing of goods, services, and intangibles. Employing doctrinal and socio-legal methods, the article classifies transfer pricing manipulation schemes into strategic misinvoicing, debt manipulation, service misallocation, and intellectual property distortions. The findings reveal that Zambia’s regulatory framework is weakened by legislative ambiguity, enforcement capacity constraints, and institutional vulnerabilities, facilitating profit shifting and erosion of the national tax base. The article recommends strengthening Zambia’s transfer pricing regime through alignment with international best practices, including country-by-country reporting, mandatory disclosure rules, and enhanced local technical capacity to address complex transfer pricing arrangements.

Keywords: transfer pricing manipulation; copper mining sector; multinational enterprises; tax base erosion; Zambia Revenue Authority; illicit financial flows (search for similar items in EconPapers)
JEL-codes: F23 H25 H26 K34 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:cwk:eafjke:2025-10

DOI: 10.59413/eafj/v4.i1.10

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