Deviations from arm’s length prices (prices charged between independent persons) charged between connected cross-border companies are corrected by primary transfer pricing adjustments, effected by the tax authorities of a country, resulting in secondary transactions classified as constructive loans, constructive dividends or constructive equity contributions. Tax could be imposed on the secondary transaction, giving rise to a secondary adjustment. For years of assessment commencing on 1 April 2012 secondary transactions, previously regarded as constructive dividends with Secondary Tax on Companies, were amended to be treated as constructive loans with interest adjustments. The primary research problem addressed by this literature study was to establish whether the constructive loan is the appropriate treatment of secondary transfer pricing transactions in the South African context and if not, whether the other alternatives suggested by the Organisation for Economic Co-operation and Development (“OECD”) guidelines should be considered. The OECD suggests that a transaction should be characterised in accordance with its substance. Determination of the subjective economic substance may be established by the motives of multinational groups for setting transfer prices. Multinational groups could have various motives for setting transfer prices that deviate from the arm’s length principle, influencing the economic substance of secondary transactions. In order to determine if the treatment of a secondary transaction, as a constructive loan, would be appropriate and reflect the economic substance of adjustments arising as a result of these motives, the characteristics of each alternative were analysed. The characteristics determined for each of the alternatives were then applied to the economic substance arising from a motive, to determine the appropriateness of each of the alternatives as a secondary transaction. Based on the motives for entering into these transactions, an analysis was performed. The findings led to the conclusion that in the case of the economic substance of transactions, which give rise to transfer pricing adjustments, a constructive dividend appears to be the appropriate treatment for a secondary transaction in most circumstances, as opposed to the constructive loan currently applied by South Africa. Constructive loans or constructive equity contributions may be reflective of the economic substance in exceptional circumstances. The study makes recommendations that South Africa should consider amending the current treatment of a secondary transaction as a constructive loan, to a constructive dividend. It was also recommended that overlapping criteria in the dividend definition be eliminated and that further research should be undertaken in order to determine how the exceptional circumstances for characterisation as a constructive loan or constructive equity contribution, should be provided for in the Income Tax Act (58 of 1962). / MCom (South African and International Taxation), North-West University, Potchefstroom Campus, 2014

Deviations from arm’s length prices (prices charged between independent persons) charged between connected cross-border companies are corrected by primary transfer pricing adjustments, effected by the tax authorities of a country, resulting in secondary transactions classified as constructive loans, constructive dividends or constructive equity contributions. Tax could be imposed on the secondary transaction, giving rise to a secondary adjustment. For years of assessment commencing on 1 April 2012 secondary transactions, previously regarded as constructive dividends with Secondary Tax on Companies, were amended to be treated as constructive loans with interest adjustments. The primary research problem addressed by this literature study was to establish whether the constructive loan is the appropriate treatment of secondary transfer pricing transactions in the South African context and if not, whether the other alternatives suggested by the Organisation for Economic Co-operation and Development (“OECD”) guidelines should be considered. The OECD suggests that a transaction should be characterised in accordance with its substance. Determination of the subjective economic substance may be established by the motives of multinational groups for setting transfer prices. Multinational groups could have various motives for setting transfer prices that deviate from the arm’s length principle, influencing the economic substance of secondary transactions. In order to determine if the treatment of a secondary transaction, as a constructive loan, would be appropriate and reflect the economic substance of adjustments arising as a result of these motives, the characteristics of each alternative were analysed. The characteristics determined for each of the alternatives were then applied to the economic substance arising from a motive, to determine the appropriateness of each of the alternatives as a secondary transaction. Based on the motives for entering into these transactions, an analysis was performed. The findings led to the conclusion that in the case of the economic substance of transactions, which give rise to transfer pricing adjustments, a constructive dividend appears to be the appropriate treatment for a secondary transaction in most circumstances, as opposed to the constructive loan currently applied by South Africa. Constructive loans or constructive equity contributions may be reflective of the economic substance in exceptional circumstances. The study makes recommendations that South Africa should consider amending the current treatment of a secondary transaction as a constructive loan, to a constructive dividend. It was also recommended that overlapping criteria in the dividend definition be eliminated and that further research should be undertaken in order to determine how the exceptional circumstances for characterisation as a constructive loan or constructive equity contribution, should be provided for in the Income Tax Act (58 of 1962). / MCom (South African and International Taxation), North-West University, Potchefstroom Campus, 2014

Submitted by Francisco de Assis Moura dos Santos (francisco.m.santos@terra.com.br) on 2013-06-10T13:44:26Z No. of bitstreams: 1 Dissertação Francisco Santos V4 - Final - Biblioteca.pdf: 2290450 bytes, checksum: da9cc6ae34ca8eb0d4487b8faa2bdb15 (MD5) / Approved for entry into archive by Janete de Oliveira Feitosa (janete.feitosa@fgv.br) on 2013-06-11T13:29:01Z (GMT) No. of bitstreams: 1 Dissertação Francisco Santos V4 - Final - Biblioteca.pdf: 2290450 bytes, checksum: da9cc6ae34ca8eb0d4487b8faa2bdb15 (MD5) / Approved for entry into archive by Marcia Bacha (marcia.bacha@fgv.br) on 2013-06-11T19:01:29Z (GMT) No. of bitstreams: 1 Dissertação Francisco Santos V4 - Final - Biblioteca.pdf: 2290450 bytes, checksum: da9cc6ae34ca8eb0d4487b8faa2bdb15 (MD5) / Made available in DSpace on 2013-06-11T19:01:39Z (GMT). No. of bitstreams: 1 Dissertação Francisco Santos V4 - Final - Biblioteca.pdf: 2290450 bytes, checksum: da9cc6ae34ca8eb0d4487b8faa2bdb15 (MD5) Previous issue date: 2013-01-29 / For the Brazilian accounting, it can be said that the year 20 10 was a real tuming point. Wi th the advent of the imple menta tion of intema tional accounting standard s, IFRS, accounting Brazi lia n, we noted that this adoption has raised the leveI of quality and compa rab ili ty of financ ia I statements of domestic compa nies. Th e change in accounting rules-based to principles-based accounting increased the degree of ju dgment required by the heads of the financiaI statemen ts. Wi th this new reality is natural that prof essionals responsibie fo r maintaining and publishing the financiai statements are still in a ie aming curve of this new culture . In this scenari o, the ob je ctive of this work is to investigate and analyze the process of convergence with Intemational Accounting Standard s, more specifically the adoption of deemed cost (CPC 27) fo r Property, Piant and Equipment. / Para a contabilidade brasileira o ano de 2010 foi um verdadeiro divisor de águas. O advento da implementação das normas internacionais de contabilidade, padrão IFRS, na contabilidade brasileira, evidencia que essa adoção elevou o grau de qualidade e comparabilidade das demonstrações financeiras das companhias nacionais. A mudança de uma contabilidade baseada em regras para uma contabilidade baseada em princípios aumentou o grau de julgamento exigido pelos responsáveis das demonstrações contábeis. Com essa nova realidade é natural que os profissionais responsáveis pela manutenção e publicação das demonstrações financeiras estejam ainda numa curva de aprendizado dessa nova cultura. Nesse cenário, o objetivo deste trabalho é investigar e analisar o processo de convergência às Normas Internacionais de Contabilidade, mais especificamente à adoção do custo atribuído (CPC 27) do Ativo Imobilizado.

This study investigates, identifies and provides flowchart summaries of the various forms of taxation in South Africa and to a lesser extent Greece affecting South African residents who own or have financed fixed property in Greece. These residents have to comply with the Income Tax and Estate Duty Acts in South Africa and the relevant taxation laws in Greece. An amnesty gave South Africans an opportunity to voluntarily declare their fixed properties and to regularise their foreign assets and tax affairs without the fear prosecution. The practical application of the various taxation provisions in both countries is extremely complex and often residents are not even aware that certain provisions apply to them. In addition there is the risk of paying nearly double the marginal rate of Income Tax and Estate Duty in South Africa and double taxation on donations. This study also provides suggestions and possible solutions to problems identified. / Taxation / M. Tech. (Taxation)

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This study investigates, identifies and provides flowchart summaries of the various forms of taxation in South Africa and to a lesser extent Greece affecting South African residents who own or have financed fixed property in Greece. These residents have to comply with the Income Tax and Estate Duty Acts in South Africa and the relevant taxation laws in Greece. An amnesty gave South Africans an opportunity to voluntarily declare their fixed properties and to regularise their foreign assets and tax affairs without the fear prosecution. The practical application of the various taxation provisions in both countries is extremely complex and often residents are not even aware that certain provisions apply to them. In addition there is the risk of paying nearly double the marginal rate of Income Tax and Estate Duty in South Africa and double taxation on donations. This study also provides suggestions and possible solutions to problems identified. / Taxation / M. Tech. (Taxation)