Abstract
In this thesis the circumstances in which tax authorities may disregard or recharacterise a
controlled transaction for transfer pricing purposes are explored, particularly where such a
transaction lacks commercial or economic substance. It critically examines whether the OECD
Transfer Pricing Guidelines provide sufficient authority for such non-recognition, and how
these principles are applied within the South African legal framework.
The research adopts a doctrinal methodology, analysing international standards alongside
South African legislation, case law and administrative practice. The study also considers the
broader implications for legal certainty and the balance of power between taxpayers and
revenue authorities.
It concludes that while both the OECD Guidelines and South African transfer pricing rules
acknowledge the possibility of non-recognition in specific limited scenarios, clearer guidance
is required to ensure consistent and fair application. This thesis contributes to the ongoing
debate on the boundaries of administrative discretion in transfer pricing and offers
recommendations for aligning domestic practice with international standards while upholding
the rule of law.