Thesis (MComm)--University of Stellenbosch, 2004. / ENGLISH ABSTRACT: Despite the fact that transfer pricing legislation (i.e. section 31 of the Income Tax Act, 58
of 1962 (“the Act”) has been in force in South Africa since 1995, it has only been in the
last three years that the South African Revenue Service (“SARS”) has embarked on a
number of assessments of taxpayers’ cross border transactions with foreign group
companies. In particular, the SARS targets taxpayers that have rendered cross border
services (including financial assistance) to a foreign group company for no consideration
and has assessed these taxpayers on the adjusted interest/ fee amounts.
Since the burden of proof lies with the taxpayer to demonstrate that its cross border
transactions with foreign group companies do not infringe the provisions of section 31(2)
of the Act, this study provides taxpayers with guidance as to when its transactions would
fall within the scope of application of section 31(2) of the Act and when the SARS would
be excluded from applying the provision of section 31(2) of the Act.
Following upon a critical analysis of the essential components of section 31(2) of the Act
the following conclusions are drawn by the author:
• If the taxpayer proves that it did not transact with a connected party (as defined in
section 1 of the Act), or it did not supply goods or services in terms of an
international agreement (as defined in section 31(1) of the Act), or its transfer
price would be regarded as arm’s length, the Commissioner would be excluded
from applying the provision of section 31(2) of the Act since all of the
components to apply section 31(2) of the Act are not present.
• The current view held by the South African Revenue Service and tax practitioners
that transactions between a South African company and an offshore company,
which are both directly or indirectly held more than fifty percent by an offshore
parent company, are transactions between connected persons (as defined in
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section 1 of the Act) is incorrect in law. Section 31 of the Act is not applicable to
such transactions.
• The Commissioner will be excluded from making a transfer pricing adjustment to
a service provider’s taxable income where the following circumstances are
present:
o Where the cross border transaction with a connected party does not give
rise to gross income, which is the starting point in the determination of
taxable income, since the service provider agreed to render services for no
consideration and was therefore not entitled to receive income (i.e. no
receipt or accrual) and
o Where the service provider can provide evidence that demonstrates that
there was no practice of price manipulation as regards the transaction
under review. / AFRIKAANSE OPSOMMING: Alhoewel oordragprysbeleid wetgewing (artikel 31 van die Inkomstebelastingwet 58 van
1962 (“die Wet”)) al sedert 1995 in Suid Afrika van krag is, het die Suid Afrikaanse
Inkomstediens (“SAID”) eers werklik gedurende die laaste drie jaar begin om aanslae ten
opsigte van belastingpligtiges se internasionale transaksies met buitelandse
groepmaatskappye uit te reik. In die besonder teiken die SAID belastingpligtes wat
dienste (insluitend lenings) aan buitelandse groepmaatskappye vir geen vergoeding lewer.
Aangesien die bewyslas op die belastingpligtige rus om te bewys dat sy internasionale
transaksies met buitelandse groepmaatskappye nie die bepalings van artikel 31(2) van die
Wet oortree nie, word belastingpligtiges in hierdie studie van riglyne, wat aandui
wanneer transaksies met buitelandse groepmaatskappye binne die omvang van artikel
31(2) van die Wet val asook onder welke omstandighede die SAID verhoed sal word om
artikel 31(2) van die Wet toe te pas, voorsien.
Na aanleiding van ‘n kritiese analise van die deurslaggewende komponente van artikel
31(2) van die Wet kom die skrywer tot die volgende gevolgtrekkings:
• As die belastingpligte kan bewys dat hy nie met ‘n verbonde persoon (soos
omskryf in artikel 1 van die Wet) handelgedryf het nie, of dat hy nie goedere of
dienste in terme van ‘n internasionale ooreenkoms (soos omskryf in artikel 31(1)
van die Wet) gelewer het nie, of dat sy oordragprys as arm lengte beskou kan
word, sal die Kommissaris verhoed word om die bepaling van artikel 31(2) van
die Wet toe te pas, aangesien al die komponente van artikel 31(2) van die Wet nie
teenwoordig is nie.
• Die huidige sienswyse van die SAID en belastingpraktisyns dat transaksies wat
tussen ‘n Suid Afrikaanse maatskappy en ‘n buitelandse maatskappy plaasvind,
waar ‘n buitelandse moedermaatskappy meer as vyftig persent van albei
maatskappye se aandeelhouding (direk of indirek) hou, beskou kan word as
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transaksies tussen verbonde persone (soos omskryf in artikel 1 van die Wet) is
regstegnies nie korrek nie. Artikel 31(2) van die Wet is nie van toepassing op
sulke transaksies nie.
• Die Kommisaris sal onder die volgende omstandighede verhoed word om enige
oordragprysaanpassing aan ‘n diensleweraar se belasbare inkomste te maak:
o Waar die internasionale transaksie met ‘n verbonde persoon nie bruto
inkomste (die beginpunt van ‘n belasbare inkomste berekening) voortbring
nie, aangesien die diensleweraar ingestem het om dienste teen geen
vergoeding te lewer, wat tot die gevolg het dat die diensleweraar nie
geregtig is om inkomste te ontvang nie (dus geen ontvangste of toevalling)
en
o Waar die diensleweraar kan bewys dat die transaksie nie onderhewig aan
prys manipulasie was nie.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/15521 |
| Date | 12 1900 |
| Creators | Van der Westhuysen, Gerdi, Van Schalkwyk, L. |
| Contributors | University of Stellenbosch. Faculty of Economic and Management Sciences. Dept. of Accountancy. |
| Publisher | Stellenbosch : University of Stellenbosch |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Format | 78 p. |
| Rights | University of Stellenbosch |
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