Abstract
M.Com.
Transfer pricing is one of the key components in international tax practices, and, because of the international focus on base erosion and profit shifting, it has become a key focus area for tax authorities across the globe. The purpose of this limited scope dissertation is to investigate challenges that taxpayers experience when complying with current South African transfer pricing legislation. Challenges from both a South African and international perspective were analysed in the context of the Organisation for Economic Co-Operation and Development's Multinational Enterprises and Tax Administrations base erosion and profit shifting initiative. This study highlights the shortcomings in regulation, such as the inapplicability of Practice Note 7, and the lack of guidance relating to financial assistance. The study further seeks to illustrate that one the most significant impacts of the base erosion and profit shifting actions on the South African transfer pricing environment is the introduction of far-reaching requirements in respect of documentation and disclosure. These developments intend to mark a significant shift in the compliance burden faced by taxpayers in South Africa, who up until the introduction of these measures would have been under no legal obligation to prepare, maintain, or file transfer pricing documentation with the South African Revenue Service. Focus is placed on the background and history of transfer pricing activities, the latest South African transfer pricing developments, and the influence of the base erosion and profit shifting project pertaining to transfer pricing activities in South Africa, thereby making recommendations to the South African Revenue Service for their consideration when issuing revised transfer pricing guidance in the future.