Insult has been added to the lack of incentives for prospecting companies by an alarming 3% add-back amendment to the transfer pricing legislation, which confronts foreign- funded prospecting companies with real tax cash costs. KPMG corporate tax head Muhammad Saloojee reports that the 3% add-back, which was previously free of any tax consequences, is now deemed a dividend for transfer pricing purposes, and is disincentivising much-needed mineral exploration in the process. Saloojee advocates the implementation of Canada’s flow-through scheme to boost local prospecting, plus the immediate removal of a number of legislative anomalies, which, he says, can be done by tweaking the application of the existing legislation.