Financing Costs

The law provides for a specific limitation to the deduction of interest on shareholder loans based on a maximum interest rate (see Sec. 13.2.). Whilst this can be seen as a safe harbour for transfer pricing purposes, the transfer pricing provisions themselves state that improper transfer prices due to thin-capitalization may be adjusted by the tax authorities. In the absence of official guidance on the matter, this can be seen as a confirmation that the existing rules capping the deduction of interest by reference to a maximum interest rate may operate as safe harbour for transfer pricing purposes in some but not all circumstances. Therefore, financing situations meeting the formal interest deduction rules, but failing on other arm’s length aspects such the debt/equity ratio or whether a third party would have granted a loan in the first place, might still be caught under the transfer pricing rules.

Head Office Overhead

The law specifically allows the deduction of head office overhead allocated to a branch or PE in Mali up to a maximum of 20% of the branch or PE’s net accounting profit before the deduction. There is no official indication as to whether this effectively operates as a safe harbour for transfer pricing purposes.