i) – Objectives of Transfer Pricing Regulations:

1. Ensure Appropriate Taxable Basis: To ensure that Ghana is able to tax on an appropriate taxable basis corresponding to the economic activities deployed by taxable persons in Ghana, included in their transactions and dealings with associated enterprises.
2. Combat Tax Evasion: To provide the Ghanaian authorities with the tools to fight tax evasion through over or under-pricing of controlled transactions between associated enterprises.
3. Reduce Economic Double Taxation: To reduce the risk of economic double taxation that might occur when transactions between associated enterprises are not priced at arm’s length.
4. Level Playing Field: To provide a level playing field between multinational enterprises and independent enterprises doing business within Ghana.
5. Certainty for Taxable Persons: To provide taxable persons with certainty regarding the transfer pricing treatment in Ghana.

(6 marks)

ii) – Explanation of Arm’s Length Principle:

The arm’s length principle is the principle that the conditions of a controlled transaction should not differ from the conditions that would have applied between independent persons in comparable transactions carried out under comparable circumstances. It ensures that transactions between related parties are conducted as if they were between unrelated parties, each acting in their own best interest.

(2 marks)