Transfer pricing : an evaluation of section 31 of the Income Tax Act

Dean, Kirsty Ann

Transfer pricing : an evaluation of section 31 of the Income Tax Act

Master Thesis

2014

Publisher

University of Cape Town

Department

Department of Commercial Law

Faculty

Faculty of Law

Abstract

The focus of this paper is on South Africa’s implementation and application of the international principles relating to transfer pricing in its domestic legislation as encapsulated in section 31 of the Income Tax Act No. 58 of 1962. Transfer pricing is currently one of the more important short term international tax considerations, specifically in the South African context where recent amendments, particularly with regard to thin capitalisation, have created a degree of commercial uncertainty for multinational enterprises. With regard to the South African context, this paper seeks to illustrate the increased compliance burden placed on South African taxpayers as a result of the 2012 amendment to section 31 of the Income Tax Act. While the revised section is aimed at reducing transfer pricing manipulation, the impact thereof on taxpayers is significant from both an administrative as well as financial perspective. In addition to evaluating the international principles and South Africa’s use thereof, this paper will also look at the extent to which developing countries are disadvantaged by the current transfer pricing framework. It is posited that the lack of access to resources, skills and expertises makes developing countries particularly vulnerable to base erosion and profit shifting by multinational enterprises.

Description

Includes bibliographical references.

Reference:

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