Abstract
Transfer pricing is currently a very topical subject and it has been like that for the last decade. Transfer pricing concerns the prices charged between related or connected companies trading in different countries for goods, services or intangible traded between themselves. The arm’s length price is widely acceptable globally as an arbitrary price that should be charged between these related companies to circumvent tax base erosion as a result of transfer prices that move profits from high tax jurisdictions to low tax jurisdictions to reduce the tax burden on the inclusive group of companies.
In South Africa transfer pricing legislation has been in existence since 1995. Practice Note No. 7 was issued by the South African Revenue Service in 1999 to provide guidelines on the procedure to follow to comply with the transfer pricing legislation. However uncertainty still exists as to the procedures taxpayers need to abide by to satisfy documentation requirements.
This study is aimed at investigating shortcomings of legislated transfer pricing documentation requirements in South Africa compared to international standards, being Australia, Canada and the Organisation for Economic Co-operation and Development with the aim of making recommendations for improvement.
M.Com.