# Sierra Leone Transfer Pricing v1.1

**General reference only.** This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.

## Who this applies to

Taxpayers with controlled transactions must compare their conditions with independent dealings in the same circumstances. The regulations cover associated-person transactions; the annual relationship declaration expressly covers persons in Sierra Leone and elsewhere. Map the actual association and transaction before computing a price. This is not a rule that every international invoice needs a profit adjustment. [Income Tax (Transfer Pricing) Regulations 2021, SI No. 3, regs. 1-3, 13-14](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).

This Guide reads that instrument together with the enacted 2026 additions to income-tax return and related-party penalty rules. It is a research workpaper with an independent source review and documented correction closure. The complete later subsidiary-instrument chain, current gazetted formats and the interpretation conflict identified under Sources remain open. The six older country Guides have not yet been re-verified by this addition.

## Rates, bands and thresholds

| Item and conditions | Rule read | Official source |
|---|---|---|
| Most appropriate method | CUP, resale price, cost plus, transactional net margin or transactional profit split; selection depends on functions, reliable data and comparability | [2021 regs. 3-5](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf) |
| Accepted range | Full range only with sufficient similarity and identified/adjusted material differences; otherwise the prescribed statistical/interquartile approach applies | [2021 reg. 7(1)-(5)](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf) |
| Indicator within the arm's length range | No adjustment under section 95 for that tested transaction/set | [2021 reg. 7(6)](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf) |
| Indicator outside the range | Compute using the median point; not an automatic adjustment to the nearest boundary | [2021 reg. 7(7)](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf) |
| Documentation request | Provide within 45 days after receipt of a written request; the authority can request additional information | [2021 reg. 15(5)-(6)](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf) |
| Related-party master file, mandatory submission | Within one month after the parent company's submission of its master file to its home-country tax administration | [Finance Act 2026 s. 8, inserted ITA s. 97(6)(d)(i)](https://webtestcms.nra.gov.sl/uploads/The_Finance_Act_2026_121df05d9b.pdf) |
| Related-party local file, mandatory submission | Within two months after the Sierra Leone taxpayer actually submits its annual tax return | [Finance Act 2026 s. 8, inserted ITA s. 97(6)(d)(ii)](https://webtestcms.nra.gov.sl/uploads/The_Finance_Act_2026_121df05d9b.pdf) |
| Country-by-country report | Within one year after the end of the tax year related to examination and assessment; separate failure-to-submit penalty wording refers to notification | [Finance Act 2026 ss. 8, 12](https://webtestcms.nra.gov.sl/uploads/The_Finance_Act_2026_121df05d9b.pdf) |
| Enumerated disclosure/master/local/CbC defaults, if ITA s. 150(4) applies | Its opening condition refers to a related-party person failing to comply with subsection (3), whose effect is unresolved. Subject to that condition, the text specifies 3% of related transaction value and a 3% ceiling for multiple violations | [Finance Act 2026 s. 12, inserted ITA s. 150(4)](https://webtestcms.nra.gov.sl/uploads/The_Finance_Act_2026_121df05d9b.pdf) |

The 2026 return-format provision requires the Commissioner-General's prescriptions to be published in the gazette. Do not invent a form, reporting threshold or group-revenue exemption from international practice. The statutory text read supplies no numerical CbC exemption on these cited pages; that observation is not proof that no other implementing instrument provides one. [Finance Act 2026 s. 8, replacement ITA s. 97(3)](https://webtestcms.nra.gov.sl/uploads/The_Finance_Act_2026_121df05d9b.pdf).

## The base

1. Delineate the controlled transaction: property/services, functions, assets, economically significant risks, contractual terms, economic circumstances and business strategy. If the contractual risk bearer lacks control or financial capacity, apply reg. 3's actual risk-allocation test; the nominal bearer is limited to no more than a risk-free return under that provision. A contract label alone does not establish the profit entitlement. [Regs. 2-3](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).
2. Select and document the most appropriate method using its strengths/weaknesses, the transaction's nature, reliable information and comparability adjustments. Reg. 4(4) requires residual profit split where specified functions can be remunerated using the traditional methods; do not omit that local condition. One method is sufficient for a given transaction. An alternative unlisted method needs the Commissioner to be convinced that none of the listed methods can reasonably apply and that the alternative reproduces independent comparable conditions. [Reg. 4](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).
3. For a one-sided method, select the tested party consistent with the functional analysis, reliable application and reliable comparables, ordinarily the less complex party. A foreign tested party still needs sufficient financial information for reliable application and authority review. Closely linked transactions can be aggregated only where the stated same/similar circumstances and inability to analyse them reliably separately are met. [Regs. 5-6](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).
4. Assess comparables and the appropriate range before comparing the taxpayer's indicator. Seek the most reliable internal/external comparables without a hierarchy. Other geographic-market comparables enter only where same-market uncontrolled-transaction information is absent and they are acceptable to the Commissioner-General. Apply reg. 3 reliability case by case, assess geographic and other effects on price/profitability and make necessary adjustments. The authority cannot rely on secret comparables unavailable to both parties. If a tested indicator is inside the permitted range, retain it; if outside, use the median. Keep tested-party financial statements, comparables, adjustments and the calculation tied to the return. [Regs. 7, 9](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).
5. For associated commodity exports priced below the specified quoted price or imports above it, apply reg. 10's quoted-price rule unless reliable evidence supports the adjustment. Reg. 1 defines the transaction date as shipment evidenced by the bill of lading or equivalent contemporaneous transport document, unless reliable contemporaneous evidence establishes the associated parties' actual agreed pricing date and that date accords with independent dealing. Where a related intermediary resells to an independent buyer above that quote, the specific resale rule also needs testing. This is not a universal quoted-price valuation of every product. [Reg. 10](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).
6. A group service charge needs an actual service and economic/commercial benefit, willingness of an independent enterprise to pay or perform it itself, and a comparable charge. Costs incurred solely because of share ownership are not an ordinary service to the subsidiary. Document separately identifiable services or a reasonable benefit-based allocation for joint services. Do not infer a blanket deduction from the parent invoice. The anomalous wording of reg. 11(5)(b) is held under Sources. [Reg. 11](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).
7. For intangibles, examine development, enhancement, maintenance, protection and exploitation, actual functions/assets/risks and control/financial capacity, both parties' perspectives and realistic alternatives. Contractual ownership alone does not allocate the return. At the transaction date, hard-to-value entry requires both no reliable comparables and highly uncertain cash-flow/income projections or valuation assumptions that make ultimate success difficult to predict. Only after those entry conditions do the rules permit consideration of later outcomes under their necessity/reliability test; those outcomes cannot be the sole basis for adjustment. [Reg. 12](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).
8. Prepare the master and local files in English with detail proportionate to complexity and volume. Master information covers group organisation, business/supply chains, intangibles, financing, consolidated financials and tax rulings/APAs. Local information covers management, industry, strategy, financials, relationships, controlled transactions, contracts, functions/risks, method/comparable search and reconciliation of the financial data. Use the complete regs. 17-27 list, not a two-page pricing memo. [Regs. 15-27](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).

Exceptional disregard under reg. 28 requires the stated whole-transaction commercial-rationality and pricing conditions, including realistic alternatives. A difficult benchmark or common ownership alone does not establish that condition. [Reg. 28](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).

## Deadlines and filing

1. Record year-end, the statutory annual return due date, actual Sierra Leone annual submission date, parent master-file home filing date and every written authority request/notification separately. The documentation must already exist at the statutory return filing date under reg. 15(4); a later mandatory submission date is not permission to postpone preparation. [Regs. 13-16](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf); [Finance Act 2026 s. 8](https://webtestcms.nra.gov.sl/uploads/The_Finance_Act_2026_121df05d9b.pdf).
2. Include the prescribed relationship declaration and controlled-transaction disclosure with the annual income-tax return, without waiting for a request. Reconcile gross related amounts with the accounts, contracts and pricing adjustments. [Regs. 13-14](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).
3. Obtain the gazetted current return/TP formats and current filing channel from the NRA. Submit the master file, local file and country-by-country report on their separate statutory triggers in the table. If a written request also arrives, maintain its independent 45-day deadline. Do not replace the new mandatory submission timetable with a request-only policy. [Reg. 15](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf); [Finance Act 2026 s. 8](https://webtestcms.nra.gov.sl/uploads/The_Finance_Act_2026_121df05d9b.pdf).
4. Retain what was submitted, its financial reconciliation, acknowledgment, dated parent filing evidence and correspondence. The exact live portal fields, prescribed file formats, acknowledgment/payment-reference process and the notification mechanics have not been authenticated. This Guide does not certify a completed submission.

Reg. 8(1) empowers the Commissioner-General to have an APA program for nonresident dealings; it does not establish that a program currently operates. If such a program is operating, the statutory application process in regs. 8(2)-(6) applies. Its reg. 8(5) 45-day provision concerns written commitment accepting the request and applicable fee/terms, not a guarantee that an agreement is negotiated and approved within 45 days. The fee is not quantified here. Reg. 8(6) permits withdrawal without either party remaining obligated by that request. [Reg. 8](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).

## Penalties and interest

The 2026 inserted ITA s. 150(4) expressly qualifies its liability by a related-party person failing to comply with subsection (3). The [2025 replacement s. 150(3)](https://webtestcms.nra.gov.sl/uploads/The_Finance_Act_2025_beb680faed.pdf) extends filing/penalty provisions to capital gains, withholding and PAYE; its connection to the new TP liability is unresolved. This Guide does not substitute s. 97(3) or treat the qualifier as absent. If s. 150(4) legally applies to the facts, its text specifies 3% for late transaction disclosure, failure to submit the local file, failure to submit the master file and failure to submit the CbC report on notification. For multiple violations, its express ceiling is 3% of the value of the related-party transaction. Identify the relevant transaction-value base and each trigger rather than adding four 3% charges mechanically. [Finance Act 2026 s. 12](https://webtestcms.nra.gov.sl/uploads/The_Finance_Act_2026_121df05d9b.pdf).

Reg. 31(1) separately refers failure to declare, disclose or make reasonable pricing efforts to Part XII of the Revenue Administration Act 2017. This is not a verified statement that every possible surcharge, assessment penalty and interest charge is included in the above cap. Their interaction, and the contradictory reasonable-effort wording in reg. 31(2), remain unresolved. Do not promise penalty protection merely because a file exists. [Reg. 31](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).

## Cross-border points

Reg. 29 provides a domestic corresponding-adjustment mechanism. Under reg. 30, a foreign adjustment is considered through the applicable double-tax agreement where the same income has already been taxed; submit the reg. 30(3) particulars, residence evidence, year, amounts, foreign adjustment/analysis and confirmation that the other party will not or cannot pursue further foreign domestic recourse that could reduce or reverse it; meet the applicable treaty time limit. The authority must accept the arm's length principle and amount involved. A foreign assessment is not an automatic deduction, refund or corresponding adjustment in Sierra Leone. No treaty rate or universal mutual-agreement deadline is supplied here. [Regs. 29-30](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).

The rules include domestic associated dealings as well as foreign dealings. Tax residence, permanent establishment, withholding and customs/GST consequences remain separate tests; a supportable transfer price does not itself settle them. [Regs. 1-3, 13](https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf).

## Two worked examples that recompute

A hypothetical reliable benchmark yields a permitted 4%–8% operating margin with median 6%. After applying the actual comparability rules, a distributor with NLe 1 million sales and NLe 30,000 operating profit has a 3% indicator outside the range. Reg. 7(7) uses the median, implying NLe 60,000 profit and a NLe 30,000 upward adjustment. A genuinely comparable distributor already earning NLe 50,000 has a 5% margin inside that range, so reg. 7(6) gives no pricing adjustment. These are assumed benchmark results, not statutory safe-harbour margins or a tax-liability calculation.

```oa-check
name: Outside range goes to median, inside range needs no adjustment
inputs:
  sales: 1000000
  low_profit: 30000
  inside_profit: 50000
  median_margin: 0.06
steps:
  - low_margin_percent: low_profit/sales*100
  - inside_margin_percent: inside_profit/sales*100
  - median_profit: sales*median_margin
  - outside_adjustment: median_profit-low_profit
  - inside_adjustment: 0
expected:
  low_margin_percent: 3
  inside_margin_percent: 5
  median_profit: 60000
  outside_adjustment: 30000
  inside_adjustment: 0
```

Assume related transactions of NLe 2 million form the same statutory base for three established defaults within ITA s. 150(4), assuming s. 150(4) legally applies after resolving its subsection (3) qualifier, with all applicable triggers met and no good-cause or other legal issue assumed. Three separate 3% calculations would total NLe 180,000. Paragraph (e) caps these multiple violations at NLe 60,000. This example addresses that provision only and does not determine the treatment of another penalty or interest statute.

```oa-check
name: Several specified defaults share the statutory cap
inputs:
  transaction_value: 2000000
  rate: 0.03
  defaults: 3
steps:
  - single_default: transaction_value*rate
  - uncapped_sum: single_default*defaults
  - capped_penalty: min(uncapped_sum,transaction_value*rate)
  - excess_if_added: uncapped_sum-capped_penalty
expected:
  single_default: 60000
  uncapped_sum: 180000
  capped_penalty: 60000
  excess_if_added: 120000
```

## Ask the client first

Obtain the ownership/control chart and all associated counterparties; transaction contracts, amounts and currencies; actual functions/assets/risk control and independent comparables; year-end, statutory and actual annual filing dates; parent home master-file filing evidence; and all authority requests/notifications plus existing master/local/CbC documentation. These determine scope, pricing, evidence and deadlines.

## Sources

| Primary source and actual reading | URL | Read on |
|---|---|---|
| Income Tax (Transfer Pricing) Regulations 2021, SI No. 3, Gazette No. 19 of 8 April 2021, made 27 January 2021. All 32 physical PDF pages, regs. 1-31 and neighbours, read through local OCR; actual final page visually checked to resolve the reg. 31(2) wording. | https://webtestcms.nra.gov.sl/uploads/Statutory_Instrument_Transfer_Pricing_Regulations_2021_73e383ce7f.pdf | 2026-11-01 |
| Finance Act 2026, Act No. 1: cover, s. 1 commencement, s. 8 return/TP filing and s. 12 penalty amendments read; actual physical PDF pp. 7-8 visually checked. Wider ordinary-tax amendments read separately; not every fee/customs schedule. | https://webtestcms.nra.gov.sl/uploads/The_Finance_Act_2026_121df05d9b.pdf | 2026-11-01 |
| Finance Act 2025 s. 10, replacement ITA s. 150, especially subsection (3), read at printed/physical pp. 8-9; actual p. 9 original image checked for the capital-gains/withholding/PAYE cross-reference. | https://webtestcms.nra.gov.sl/uploads/The_Finance_Act_2025_beb680faed.pdf | 2026-11-01 |
| NRA laws catalogue, used to locate the actual published instruments, not as an assertion of a complete amendment chain. | https://nra.gov.sl/tax-laws | 2026-11-01 |

Not yet confirmed: Actual APA program availability and current application channel; the unresolved opening s. 150(3) qualifier in the 2026 penalty amendment, read with the 2025 replacement; complete later subsidiary-instrument chain and current gazetted forms/portal fields; CbC notification and threshold implementation; application where the parent has no home master-file filing obligation; interaction between the 2026 filing clocks and pre-existing contemporaneous-document duties; precise extent of the transaction-value base/cap across several transactions and interaction with other penalties/interest; foreign treaty instruments and procedure. Actual scanned reg. 31(2) says a taxpayer is deemed NOT to have made reasonable efforts where complete and accurate documentation exists, which conflicts with the apparent purpose and cannot be silently reversed. Reg. 11(5)(b) refers to an allocation variable relating exclusively to uncontrolled transactions; the precise effect of that wording also remains held. Neither ambiguous clause is used to compute relief or a penalty defence. Initial independent review required six corrections; focused closure accepted the corrected conditional source-reference draft. The TP domain remains partial.