Evaluating Transfer Pricing Methodologies for Multinational Enterprises in Zambia: A Critical Appraisal of OECD-Compliant Approaches and Local Implementation Challenges

Abstract

This article undertakes a critical examination of the principal transfer pricing (TP) methodologies endorsed by the Organisation for Economic Co-operation and Development (OECD) and the United Nations (UN), focusing on their applicability within Zambia’s legal and economic environment. Specifically, it evaluates the five primary TP methods—the Comparable Uncontrolled Price (CUP), Resale Price Method (RPM), Cost-Plus Method (CPM), Transactional Net Margin Method (TNMM), and the Transactional Profit Split Method (TPSM)—in the context of Zambia’s mining-dominated economy and limited comparable market data. Drawing from the Zambia Revenue Authority’s Practice Notes and supported by global jurisprudence and policy analysis, the article identifies methodological suitability, enforcement feasibility, and administrative complexity as pivotal determinants of effectiveness. The findings reveal a disproportionate reliance on one-sided approaches (TNMM, CPM, RPM), limited application of CUP due to data constraints, and the underutilisation of TPSM despite its contextual advantages. The article concludes by recommending a hybridised, context-sensitive TP framework that enhances fairness, enforceability, and alignment with Zambia’s development imperatives.