The laws surrounding transfer pricing are becoming ever more complex, as tax affairs of multinational companies are facing scrutiny from media, regulators and the public.

In the current global economic environment, transfer pricing is subject to much attention, particularly evidenced by the Organisation for Economic Cooperation and Development’s (OECD’s) initiative to address perceived base erosion and profit shifting (BEPS).

The South African Revenue Service (SARS) has taken to the BEPS initiative, as further evidenced by the Davis Tax Committee in 2014, and the Minister of Finance’s budget speech to Parliament in February 2015, 2016 and 2017. On 28 October 2016, SARS published a public notice that introduces compulsory transfer pricing record keeping requirements for taxpayers in relation to their cross border related party transactions with a value of more than R100 million.

Furthermore, in April 2016, SARS published specific draft regulations for country-by-country reporting and SARS has amended its income tax return (ITR) 14 to request additional transfer pricing information from taxpayers. This shows SARS’ increased focus on transfer pricing.

AJ Jansen van Niewenhuizen

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Marcus Stelloh

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