The National Revenue Authority (NRA) wishes to announce the implementation of new public guidelines aimed at creating and maintaining a Safe Harbour for Iron Ore Pricing in Sierra Leone. These public guidelines aim at determining the arm’s length price of Iron Ore sold to an associated person under section 95 of the Income Tax Act 2000 (as amended) and section 10 of the Income Tax (Transfer Pricing) Regulations 2021.
Key Public Guidelines Include:
1. The Safe Harbour is applicable to any taxpayer in Sierra Leone who engages directly or indirectly in a transaction with an associated person for the export of Iron Ore, including a taxpayer operating under a Mining Lease Agreement.
2. A taxpayer selling iron ore to an associated person by export must calculate the quoted price following the methodology set out in these guidelines. If the agreed price between the taxpayer and the associated person is lower than the quoted price, the quoted price must be used for the purposes of determining income tax, mineral resource rent tax, and mineral royalties.
3. If a taxpayer follows these guidelines, the Commissioner-General would not seek to revise the price used. The National Revenue Authority (NRA) could still audit and review transactions to ensure compliance with these guidelines and verify other aspects of transactions, such as the physical properties of the ore shipped.
4. If a taxpayer considers that a price lower than the quoted price meets the arm’s length standard, they can submit evidence to the Commissioner- General requesting to use the agreed price or requesting additional adjustments to the quoted price. The documents submitted must meet the requirements in these guidelines.
5. The Commissioner General will consider the evidence against the relevant provisions of Sierra Leone law and in technical consultation with the National Minerals Agency. The Commissioner General may accept some, all, or none of the adjustments resulting in a price lower than the quoted price pursuant to the Laws of Sierra Leone.
6. A key factor for the Commissioner-General will be credible evidence that demonstrates an approach consistent with standard industry practices between arm’s length parties. In some special cases, such as a sale to an associated person that is subsequently sold by them to an unrelated person, or a shipment sold in lots where one or more buyers is an unrelated person, the price agreed with an unrelated person would generally be accepted by the Commissioner General if it meets certain conditions that ensure comparability.
Your support is vital to the success of the implementation of the Guidelines. Together, we can safeguard the revenues of the country and make Sierra Leone a better place for businesses to thrive and for its citizens to dwell.
We appreciate your cooperation and understanding!
By Order of the Commissioner General!
Public Affairs and Tax Education Unit
RENSIS HOUSE, 5 GLOUCESTER STREET, FREETOWN.
Call Centre No: 839 (Orange & Africell)