PRINCIPIOS Y NORMAS GENERALES

Ensor (2014) states that the SA government and SARS are under pressure to introduce dedicated legislation to ban transfer pricing when it is used as a tax-avoidance measure to shift profits offshore. The heightened focus on value chain analysis and aligning profits with substance and real economic activity has led many MNEs to critically evaluate their group-wide transfer pricing policies. Furthermore, the updated and elevated guidance provided by the BEPS project has in many ways assisted MNEs in performing this analysis and arriving at the arm’s length principle. As a result, it is hoped that the uniform implementation of the three-tiered approach globally, and the open exchange of CbC reports amongst tax authorities, might also hold some benefits for taxpayers in SA. Accordingly, with the increased global transparency and uniform reporting of information, the information held by offshore parties should become more readily available, and thereby further assist SA taxpayers in responding to SARS’ requests.

Given this apparent pressure and the need for clearly articulated guidelines and laws, this limited scope dissertation intended to establish the foundation for a thorough analysis on the need for transfer pricing guidelines in the SA business environment. Focus was placed on the background and history of transfer pricing activities, the latest SA transfer pricing developments, and the influence of the OECD’s BEPS project on the SA transfer pricing environment.

Based on the research performed, it is accepted that SA will continue to look to the developments and recommendations put forward by both the OECD and the UN for guidance. Furthermore, SA has also reaffirmed its commitment to close co-operation with its BRIC partners in combating BEPS, including the exchange of best practices, and working towards common approaches to these issues. However, to what extent SARS will implement the various elements of the updated OECD Guidelines is not clear. Considering the challenges mentioned above, as well as an increased focus to prevent BEPS, one could argue that there is a need for further research to be performed on this topic to provide taxpayers with clear guidelines regarding the application of the ALP, and the influence of the BEPS project on SA when dealing with transfer pricing activities.

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