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.
Outline of the webinar:
- Financial Assistance
On 17 January 2023 SARS published Interpretation Note 127 that provides guidance on the pricing of inbound intra-group loans. This interpretation note moves away from the so-called “Thin-cap risk level indicators” to a market-based approached.
During this session we will unpack this interpretation note to give you a high-level understanding of what is required from taxpayers.
- 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 its pricing, this can lead to costly 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.
- Operational Transfer Pricing (OTP)
One of the biggest challenges in transfer pricing is ensuring that your business model and transfer pricing policy translate into a simple intercompany agreement that is accurately implemented and 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.
- Advance 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 achieve advance tax certainty and avoid costly 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 bilateral APA framework introduced by the South African Revenue Service in the latest draft legislation, including the expected opportunities and the practical challenges of such a programme for taxpayers.
The webinar will contribute to 2.25 hours CPD/CPE.
R805.00 (inclusive of VAT) / R700.00 (exclusive of VAT)