Some multinationals in Ghana’s oil space have been milking the nation through transfer pricing, according to the acting National Petroleum Commission CEO, Egbert Faibille.
A transfer price is the price at which divisions of a company transact with each other, such as the trade of supplies or labor between departments. Transfer prices are used when individual entities of a larger multi-entity firm are treated and measured as separately run entities.
Speaking at the Oil and Gas, local content conference in Takoradi, Mr. Faibille alleged many of the companies with joint venture arrangements are culpable, but failed to give names.
“The Commission is fully aware that most companies in Joint Venture (JV) arrangements are engaged in Transfer Pricing in order to always ensure that the JV companies do not declare profit to be shared with their local partners,” Mr. Faibille said.
He added: “This practice must stop and we are working with the Ghana Revenue Authority to bring sanity in the conduct of financial transaction in the industry. The era of transfer pricing must stop.”
Mr. Faibille told the gathering that the government will soon draft a legislation to make Transfer Pricing illegal and institute stiff punishment for companies who fall foul.
“We seek to make it a crime to engage in such acts and if we find out your director and management staff and all shadow persons may end up being prosecuted when we get the assent of parliament to have such conduct criminalized in subsequent legislation,” he noted.