Globally Tax Authorities are placing a significant focus on Base Erosion and Profit Shifting (BEPS), with transfer pricing being one of the key areas of focus. The South African Revenue Service (SARS) being no exception. Over the past 2 years, additional resources have been allocated to expand SARS’ specialised transfer pricing audit and investigation skills.

It is therefore essential for all businesses transacting cross-border to stay up to date on the latest development in the transfer pricing landscape. This webinar has been designed to create awareness and to keep you informed so that you can plan accordingly and manage and mitigate the potential tax risks.

1. Financial Assistance

On 17 January 2023 SARS published Interpretation Note 127 that provides guidance on the pricing of inbound intra-group loans. This new interpretation note moves away from the so-called “Thin-cap harbours” to a market-based approached.

During this session we will unpack this new interpretation note to give you a high-level understanding of what is required from taxpayers.

2. Transfer pricing controversy

It is widely acknowledged that disputes arise as to the correct amount of tax payable in an area such as transfer pricing. Transfer pricing disputes – referred to as enquiries or audits – arise between tax authorities and businesses and involve tax authorities checking the ‘arm’s length’ nature of the transfer pricing applied between the different entities/permanent establishments of a multinational business.

The enquiry process involves tax authorities gathering information in order to determine whether the transfer pricing applied results in the local entity earning an ‘arm’s length’ amount of profits. In the enquiry, if a business cannot successfully defend their pricing, this can lead to transfer pricing adjustments which increase the amount of profits taxed in that country – resulting in double taxation, if those profits have been taxed elsewhere.

During this session we will discuss the approach currently being taken by Revenue Authorities in Africa and the role of audit readiness in the controversy lifecycle.

3. Operational Transfer Pricing (OTP)

One of the biggest challenges in transfer pricing is ensuring that your business model and transfer pricing policy translates into a simple intercompany agreement that is accurately reflected in your financial statements and statutory returns.

OTP is the accurate, transparent and efficient implementation of transfer pricing policies in the books and records of a company based on quality data and robust processes and controls.

This session will cover the importance of OTP in the transfer pricing and tax spheres as well as pragmatic solutions to obtain the data requirements.

4. Advanced Pricing Agreements (APA’s)

An Advance Pricing Agreement (APA) is a procedural agreement between one or more taxpayers and one or more tax authorities that aims to avoid any transfer pricing disputes. An APA determines in advance a set of criteria to apply, within a specified period of time, for specific cross-border transactions between related parties, to ensure their consistence with the arm’s length principle.

During this session we will discuss the proposed APA programme to be introduced by the South African Revenue Service, as well as the expected opportunities, such as advance tax certainty, and the practical challenges of such a programme for taxpayers.

Philip Fouché

Philip Fouché, a registered attorney, is an Associate Director in Transfer Pricing at Deloitte. He advises clients on their transfer pricing policies and supporting documentary requirements in line with the OECD Guidelines. Philip regularly performs transfer pricing risk reviews and audits. He is also involved in due diligence reviews for corporate restructuring projects, business model reviews and tax dispute resolution in respect of transfer pricing matters.

Nicole Camara

Nicole is a Senior Manager in the South African transfer pricing team and has a MCom in Taxation. She has experience on multinational transfer pricing compliance projects, transfer pricing planning/restructuring initiatives and the introduction of technology into the transfer pricing lifecycle.  In addition, she has experience in interaction with the South African Revenue Services and various Revenue Authorities from across the African region and establishing defence ready strategies for multinational clients.

Kananelo Lethena

Kananelo, a Senior Manager in the South African transfer pricing team, is a Bcom Accounting graduate and holds an Honours degree In Taxation and a Certificate in Mining Tax Law. Kananelo has over 8 years’ working experience, with 6 of these specialising in transfer pricing. Prior to joining Deloitte, he spent a considerable time at the South African Revenue Services, where he worked as a Tax Auditor. Kananelo has played a key role in management of large transfer pricing projects in the African territory. He has advised clients in a wide range of industries including automotive industry, banking and financial services, telecoms, manufacturing, mining and energy, and construction. Kananelo has experience in the fields of, amongst others, transfer pricing documentation and transfer pricing policy design.

Kailasha Padayachy

Kailasha a qualified Transfer Pricing Specialist and is a Manager in the South African transfer pricing team. She has experience in transfer pricing compliance as well as transfer pricing advisory projects including planning, model design, conducting transfer pricing reviews and restructuring projects. In addition, Kailasha has experience with transfer pricing dispute resolution which includes responding to Revenue Authority queries and audits and objecting against transfer pricing related assessments.

Should you have any administrative questions regarding this webinar, please contact us at dsot@deloitte.co.za