THE noose is tightening on companies that use price or cost manipulations in transactions with related parties to adjust their tax bills following the introduction by the Inland Revenue Board (IRB) of sweeping new guidelines that could paralyse this practice.
The practice, generally known as transfer pricing, is being aggressively targeted by the IRB in the new guidelines it rolled out on Tuesday which introduced five testing methods that would determine if an inter-company transaction was priced at arm's length. (An arm's length transaction would be one involving two unconnected, independent parties.)