Pacific Island tax administrators are learning new tactics to ensure multinational corporations pay their fair share of taxes in a workshop that opened on Monday in Tonga’s capital.
The Pacific Islands Tax Administrators Association (PITAA) and Asian Development Bank (ADB) are co-organized the region’s first transfer pricing clinic in Tonga from August 25-28, bringing together tax officials across the Pacific and from the Maldives, who oversee tax collection from MNEs in some of the world’s smallest economies.
“Multinational enterprises bring both opportunities and risks. Their profits must be fairly reflected and fairly taxed within our borders,” said Mr Michael Cokanasiga, head of Tonga’s Ministry of Revenue and Customs.
Abusive transfer pricing occurs when multinational companies shift profits between countries to minimise their overall tax burden—often at the expense of developing nations that desperately need tax revenue for public services.
Pacific Island nations face unique challenges because their economies heavily depend on key industries like fishing, tourism, telecommunications, and commodity exports that are dominated by large international companies.
The four-day intensive workshop focuses on practical skills rather than theory. Participants work through real-world scenarios, learning to:
• Spot when companies are artificially shifting profits to avoid taxes
•Identify industry-specific transfer pricing risks
• Conduct thorough audits of multinational corporations
• Implement and utilize exchange of tax information mechanisms with other countries to identify and mitigate aggressive tax planning.
“Our diverse economies and reliance on key industries demand tailored approaches to tackle transfer pricing risks,” explained Mr Petero Maivucevuce, PITAA’s Head of Secretariat.
“To effectively tackle transfer pricing cases, a range of interconnected elements must come together: industry knowledge, access to information, confidence in using exchange mechanisms, the right audit incentives, and practical skills. This clinic is designed to combine all these aspects in a way that reflects the realities of Pacific island economies, so we can mobilize revenue and strengthen regional cooperation,” emphasized Sathi Meyer-Nandi, International Tax Focal of ADB’s Asia Pacific Tax Hub.
Beyond individual training, the workshop hope to create a regional network where Pacific tax officials can collaborate and share intelligence about complex cross-border cases, facilitate experience sharing and peer learning.
The workshop represents the first time PITAA and ADB have organized a major regional training event in Tonga, signalling the growing sophistication and demand within Pacific tax administration to tackled cross-border transfer pricing challenges.
Participants include experts from ADB, the Global Forum on Transparency and Exchange of Information for Tax Purposes, and industry experts from New Zealand’s Inland Revenue, and Tax Inspectors Without Borders.
The clinic-style workshop addresses real challenges identified in last year’s regional international tax workshop held in Samoa, as well as through a PITAA-wide survey designed to target industries most relevant to Pacific jurisdictions. Key focus sectors include commodities, fisheries, telecommunications, and tourism—industries where multinational companies often use complex structures to shift profits away from Pacific nations.
Through hands-on exercises and expert guidance, the workshop aims to strengthen participants’ ability to identify and mitigate transfer pricing risks, conduct transfer pricing audits, and utilise international exchange of information mechanisms to secure critical cross-border tax information.
The workshop is co-organized and co-funded through ADB’s Asia Pacific Tax Hub, which supports developing countries in addressing cross-border tax evasion and aggressive tax planning to mobilize domestic revenues. This is done in close collaboration with partners to ensure complementarity and customization that reflects the unique realities of small island economies. PITAA and ADB acknowledged their strong partnership and the valuable collaboration of international partners in making this workshop possible.