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13.4.1. Main Rules

The transfer pricing rules were significantly amended by the Finance Laws 2016 and 2018. Pursuant to the regulations as amended, transactions between related parties are required to be at arm's length. Accordingly, any profits indirectly transferred to a non-resident related party, whether through increased or reduced sales or acquisition prices or through any other means, may be recaptured and assessed to tax in Mauritania.

Definition of Related Parties

Under the new TP provisions, transactions are deemed to be between related parties if:

  • One party holds the majority of the share capital in other party, or otherwise exercise therein a de facto decision-making power;
  • Both the parties are controlled as per above by a third party; or
  • Transactions with parties established in a low-tax or non-cooperative jurisdiction fall under the transfer pricing rules regardless of the actual relationship between the parties, unless the resident party evidences that it is not related to the other party. For those purposes, an entity is deemed to be established in a low-tax jurisdiction if not taxable therein or if subject therein to a tax that is 50% or more lower than the tax that would have been due in Mauritania in similar circumstances.

Applicable TP Methods

The following TP methods apply to transactions between related parties that are consistent with the OECD transfer pricing guidelines:

  • Comparable uncontrolled price (CUP) method;
  • Resale price method;
  • Cost-plus method;
  • Transactional net margin method (TNMM);
  • Profit split method; and
  • Other methods.

There is no hierarchy of methods prescribed under the domestic law, instead, a transfer pricing method can be selected based on the most appropriate method criterion and based on the OECD transfer pricing guidelines

Use and Availability of Comparables

There is no formal requirement regarding the inclusion of local comparables in the benchmarking set, and no obligation to use a particular database.

The use of comparables depends on the facts and circumstances of the transactions. Taxpayers may use internal or external comparables for determining the arm’s length price.