Reconciling Global Norms and Local Realities: An Assessment of Zambia’s Legislative and Institutional Framework on Transfer Pricing Regulation

Abstract

Transfer pricing (TP) regulation has become a central concern in global tax governance, particularly in resource-rich developing countries susceptible to base erosion and profit shifting by multinational enterprises (MNEs). This article critically evaluates Zambia’s legislative and institutional framework for transfer pricing, focusing on its alignment with the OECD Transfer Pricing Guidelines and the United Nations Practical Manual. Drawing upon Zambia’s Income Tax Act, statutory instruments, practice notes, and the evolution of regulatory amendments from 1999 to 2023, the study explores the legal, administrative, and practical implications of enforcing the arm’s length principle (ALP). The findings reveal that although Zambia has adopted many international best practices, its enforcement regime remains weakened by limited administrative capacity, legislative fragmentation, data inaccessibility, and insufficient penalties. Using a comparative doctrinal method, the article underscores the need for contextual legal reforms and capacity-building mechanisms to improve the effectiveness of TP governance in Zambia and other similarly situated African jurisdictions.