International trade has experienced spectacular growth in recent decades, supported by a broad movement towards economic globalization and rapid progress in the means of communication. As customs barriers have been dismantled, we have witnessed the birth of groups of companies which have gradually « internationalised » in order to take advantage of competitive and regulatory advantages, thus increasing the flow of intra-group transactions. Like other transactions, those carried out by entities of the same group give rise to invoicing and the price used is therefore called the “transfer price”. Only, the latter often prove to be important sources of tax evasion or tax evasion. To deal with this, the Gabonese legislator has provided that each company established in Gabon that is part of a group of companies, is required to produce transfer pricing documentation. This is a document whose content allows the tax administration to trace all the transactional flows carried out by the local Gabonese company belonging to a group of companies during the financial year. On reading the foregoing, one should wonder about the legal regime of the obligation of documentation in terms of transfer pricing in Gabon. Answering this question will amount to presenting, on the one hand, the content of the obligation of documentation in terms of transfer pricing (I) before raising, on the other hand, the penalties applicable to the non-observance of this obligation (ii).
- The content of the transfer pricing documentation obligation
The obligation of documentation as provided for by article P-831 bis of the Gabonese general tax code translates, for the legal person established in Gabon, the obligation to submit or send to the tax administration documentation allowing justify the pricing policy practiced in the context of transactions of any kind carried out with associated companies established abroad. It is appropriate for a better understanding to determine the content of said documentation as well as its production methods.
With regard to the content of the documentation, reporting companies are required to produce two types of files, in particular: the Main file and the Local file. The Master File aims to provide an overview of the multinational enterprise group. It includes information on the nature of the group’s activities, its overall transfer pricing policy and this file must contain: the organizational structure; description of the field(s) of activities of the multinational enterprise group; the intangible assets of the multinational enterprise group; business-to-business financial activities of the multinational enterprise group; financial and fiscal situation of the multinational enterprise group.
The local file is a declaration specific to the member company of the group of multinational companies established in Gabon. It must include precise information on transactions between the local entity and the other entities of the group. The form referred to below consists, on the one hand, of general information on the company, in particular the local entity, and on the other hand, information on cross-border transactions, namely: controlled transactions and financial information.
As regards the procedures for producing the documentation, the company is required to present the main file and the local file in dematerialized form no later than April 30 of the year following that of the tax year precisely at the time filing of the Statistical and Tax Declaration. Failure to comply with this obligation entails penalties. Taxpayers must file the master file on form PT01. As for the local file, it must be produced under the PT02 form.
- Sanction applicable to non-compliance with the obligation of documentation
Failure to comply with the obligations relating to transfer pricing documentation is liable to fines provided for in the Book of Tax Procedures. In the event of partial production or failure to produce the above-mentioned documents, the administration sends the legal persons above a formal notice to complete or produce the documents or the expected supplements within a period of sixty days.
When the company does not produce the required documentation or produces partial documentation within the period of sixty days following receipt of the formal notice sent by the administration, it is liable to a fine provided for in article P-1010 bis again. The latter provides that: «Failure to comply with the documentary obligations in terms of transfer pricing, exposes the company concerned to a penalty equal to 5% of the total amount of intra-group exchanges of the company with a minimum of 65,000,000 FCFA per fiscal year. In other words, companies subject to the production of the main file and the local file: application of a penalty equal to 5% of the total amount of the company’s intragroup transactions. This penalty cannot be less than the sum of 65,000,000 FCFA per fiscal year.
Moreover, it is important to remember that the obligation of transfer pricing documentation as provided for by the Gabonese legislator constitutes a means for the tax administration to verify or trace the transactional flows of the company during the financial year in question. By submitting non-compliance with this obligation to the application of sanctions, the Gabonese legislator aims to fight against fraud and tax evasion. With a view to reducing the rate of tax evasion and tax evasion to the lowest level, Gabon also took part in the signing of the multilateral agreement on the exchange of country-by-country declarations.