Being Prepared — Compliance With Namibian Transfer Pricing Legislation

The Namibian Income Tax Act (Section 95A) empowers the Receiver of Revenue to adjust the consideration paid or received in respect of an international transaction between connected persons to reflect the arm's length price for goods or services in determining the taxable income of the Namibian taxpayer.

Practice Note 2/2006 requires a taxpayer to compile a Transfer Pricing policy document setting out the basis upon which prices are set for international transactions between connected persons. This will be the taxpayer's defense in showing that a price charged between connected persons is an arm's length price (i.e. what unconnected persons would have charged under the same circumstances).