Sierra Leone is losing millions of US dollars each year due to transfer mis-pricing by multinational corporations according to a recent report.
Published by the Budget Advocacy Network (BAN), Transfer Pricing 2017 attempts to assess and quantify domestic revenue losses through and transfer mis-pricing and other trade-based financial crime.
Iron ore and bauxite
The report identifies sectors in which mis-invoicing is an increasing problem. In the iron ore sector, revenue losses increased sharply in line with production, from US$14.1 million in 2010 to $205.95 million in 2013.
Between 2013 and 2015 a total of US$3.69 million was lost in respect of mis-pricing of iron ore sales, whilst US$1.28 million was lost due to mis-pricing in the bauxite sector in the same period.
Growth related losses
The report defines transfer mis-pricing as the over- or under-invoicing of related party transactions in order to avoid government regulations.
Strong foreign direct investment growth in Sierra Leone – from a low of US$8.62 million in 2003 to a high of US$950.5 million in 2011 – appears to come with much stronger trade mis-invoicing outflows and revenue losses the report concluded.
BAN’s report, Transfer Pricing 2017, can be found here.
Categories: Trade Based Financial crimes News