Author(s): Natasha Makanaka Mapiye, Wadesango Newman & Lovemore Sitsha
This research study examined the challenges and implications of applying the Zimbabwean Transfer Pricing Rules on small and medium-sized enterprises (SMEs). The study explores the transfer pricing rules in Zimbabwe and their relevance to SMEs, as well as the challenges that SMEs face when attempting to comply with these regulations. The research draws on qualitative and quantitative data collected through interviews and questionnaires with SME owners, tax experts and government officials involved in implementing and enforcing transfer pricing rules. The findings of the study indicated that SMEs face significant challenges in complying with Zimbabwean transfer pricing regulations due to limited resources, lack of knowledge and complex reporting requirements. SMEs also struggle to access the necessary information and support to accurately determine arm’s length prices for their transactions with related parties, which often results in penalties and fines. The study highlighted the importance of creating a conducive environment for SMEs to comply with transfer pricing regulations. This includes simplifying reporting requirements, providing support and education to SME sand ensuring that tax authorities have a clear understanding of the unique challenges that SMEs face. Failure to address these challenges may result in SMEs being unfairly penalized and may negatively impact their ability to compete in the market