In 2017 an amended version of the OECD Transfer Pricing Guidelines was published which included new provisions to prevent BEPS through the shifting of risks. Through the amendment of the Guidelines, it was clarified that for an entity in an MNE to contractually assume a risk, for transfer pricing purposes, it needs to control the risk and have the financial capacity to assume it. Since the proposal of an updated framework regarding risk it has been discussed whether the framework on risk was the right way to go to come to terms with the problem with the shifting of risks and whether the concept of control over risk is in line with the arm’s length principle which constitutes the foundation for the Guidelines. The objectives of the thesis include providing an overview of the OECD framework related to risk, analysing, and evaluating the definition of control over risk, and assessing its application and interpretation in Swedish courts. On the basis of this the objectives are to examine the consequences of the concept and its application in relation to the arm’s length principle and Swedish law and with this discussing the future of the Guidelines in Swedish law. To assess whether an entity in a MNE has control over risk multiple sub-concepts needs to be assessed out of which few have a clear meaning. Of main importance when assessing the concept is to determine the performance of decision-making functions. The interpretation of control over risk has in some cases, in Swedish courts, led to results which are not in line with the principle of legality and the principle of the actual substance of the transaction. Similarly, to the Guidelines, the Swedish courts put emphasis on the performance of decision-making functions in order to have control over risk. Parts of the control over risk concept can be seen as not being in line with the arm’s length principle by imposing higher control and financial capacity requirements on entities in MNEs than what independent enterprises actually have. Because of the inherent problems in defining control over risk, the effects of the interpretation of the concept in Swedish courts, and the non-arm’s length character of the risk assessment it can be questioned which role the Guidelines should have in Swedish law.

On 8 June 2012, National Treasury amended Regulation 10(1) (c) of the Exchange Control Regulations to specifically include intellectual property. In so doing, all companies wishing to dispace intellectual property to an offshore destination had to obtain prior approval from National Treasury. However, National Treasury is reticent to grant permission to reassign these assets, as revenue from intellectual property is perceived to contribute vastly to the South African tax revenue. This amendment came into being shortly after the dismissal in the Oilwell case. This case, in essence, held that intellectual property is not capital for the purposes intended by National Treasury, and therefore no prior approval to assign it offshore is required from National Treasury. This dismissal led to a large outflow of intellectual property to tax favourable foreign locations. At the same time, it exposed transfer pricing risks that had previously gone unnoticed. Although these risks have once again been mitigated by the amendment to Regulation 10(1) (c), it does not mean that it is now a thing of the past, best left forgotten. The South African government intends to relax or abolish all exchange control regulations in the future. At present the exact date when this is to take place is not known. Once the exchange control regulations are abolished, the transfer pricing risks associated with intellectual property will once again come to the forefront and will lead to significant loss to South African tax revenue. The three main risks that became apparent during the period before the amendment to Regulation 10(1) (c) are the following: * Transfer pricing risk consisting of mainly: - A lack of a comparables database to enable tax administrators to determine an appropriate arm’s length price for intellectual property. - A lack of the relevant skills, experience and knowledge required to accurately assess transfer prices of intellectual property. * Challenges in obtaining relevant, comprehensive and timely information to accurately determine arm’s length prices for intellectual property transactions. * A lack of understanding the principle of economic substance and legislation in South Africa to define economic substance parameters. * In this mini-dissertation, these weaknesses are discussed in more detail to highlight to SARS the trials it faces when the exchange controls regulations are expelled. Various ways in which these flaws can be challenged head-on are also presented. / MCom (South African and International Tax), North-West University, Potchefstroom Campus, 2014

On 8 June 2012, National Treasury amended Regulation 10(1) (c) of the Exchange Control Regulations to specifically include intellectual property. In so doing, all companies wishing to dispace intellectual property to an offshore destination had to obtain prior approval from National Treasury. However, National Treasury is reticent to grant permission to reassign these assets, as revenue from intellectual property is perceived to contribute vastly to the South African tax revenue. This amendment came into being shortly after the dismissal in the Oilwell case. This case, in essence, held that intellectual property is not capital for the purposes intended by National Treasury, and therefore no prior approval to assign it offshore is required from National Treasury. This dismissal led to a large outflow of intellectual property to tax favourable foreign locations. At the same time, it exposed transfer pricing risks that had previously gone unnoticed. Although these risks have once again been mitigated by the amendment to Regulation 10(1) (c), it does not mean that it is now a thing of the past, best left forgotten. The South African government intends to relax or abolish all exchange control regulations in the future. At present the exact date when this is to take place is not known. Once the exchange control regulations are abolished, the transfer pricing risks associated with intellectual property will once again come to the forefront and will lead to significant loss to South African tax revenue. The three main risks that became apparent during the period before the amendment to Regulation 10(1) (c) are the following: * Transfer pricing risk consisting of mainly: - A lack of a comparables database to enable tax administrators to determine an appropriate arm’s length price for intellectual property. - A lack of the relevant skills, experience and knowledge required to accurately assess transfer prices of intellectual property. * Challenges in obtaining relevant, comprehensive and timely information to accurately determine arm’s length prices for intellectual property transactions. * A lack of understanding the principle of economic substance and legislation in South Africa to define economic substance parameters. * In this mini-dissertation, these weaknesses are discussed in more detail to highlight to SARS the trials it faces when the exchange controls regulations are expelled. Various ways in which these flaws can be challenged head-on are also presented. / MCom (South African and International Tax), North-West University, Potchefstroom Campus, 2014