Practical aspects on transfer pricing

Transfer pricing and the inherent arm’s length principle has been around for some time now and many African countries have implemented transfer pricing regulations. In Africa, only about five countries had transfer pricing legislation in place before 2000, now in 2019, only about five countries do not have any arm’s length or anti-avoidance provisions in place dealing with transfer pricing. Out of these countries approximately 40 countries in Africa have some sort of formal transfer pricing documentation requirements, be it in the form of formal submission or retention requirements. 

Continue reading “Practical aspects on transfer pricing”

Dividends are considered a potentially affected transaction by SARS

I was reading the “How to complete and submit your country by country information” external guide published by SARS and came across the below.

For the purposes of calculating the value of a taxpayer’s annual aggregate (potentially affected transactions): Continue reading “Dividends are considered a potentially affected transaction by SARS”

Nigeria is ready for transfer pricing, are you?

Many of our readers have an exposure to transfer pricing risk in Nigeria, it being the largest African economy by GDP in 2017. So I thought I would share an update on Nigeria’s transfer pricing.

Nigeria has aligned its transfer pricing rules to the recommended approach in the 2017 OECD Guidelines. This includes the CBCR, master file and local file documentation approach as per Chapter V. What I wanted to highlight though is that the Federal Inland Revenue Services (FIRS) has also introduced other changes, including: Continue reading “Nigeria is ready for transfer pricing, are you?”

Oops, I didn’t get my DTA relief!

Hi there! A quick introduction before we get to business, my name is Shazia and I am the latest addition to the Transfer Pricing team at Grant Thornton. About 10 months back I saw the light and decided to join the TP community and I have not looked back since. Prior to joining Grant Thornton, I was at EY for 3 years where I successfully completed the tax trainee programme. This is my first stab at writing a post for a blog and I am glad to have you walk this journey with me… so here goes…

Continue reading “Oops, I didn’t get my DTA relief!”

Forex gains and losses a no brainer?

Hi all – given that this is my first blog on transferpricing.co.za, a short introduction may be apt. More importantly, given that this is my first blog EVER, please bear with me as I make the transition from formal writing to being BLOGGY. As far as intro’s go, I am a Partner at Grant Thornton in South Africa, heading up the Transfer Pricing practice. I have been consulting on tax matters since 2001, having spent the last 11 years at Grant Thornton and the earlier years at KPMG and EY. Prior to embarking on my tax consulting career, I spent 7 years “on the other side” working in cost and financial accounting and reporting environments the manufacturing and the financial services sectors. More to the topic, I have been involved in TP for 10 years and for so many reasons, love every minute of it…even when people think that a one-pager will suffice as a TP report or policy. Continue reading “Forex gains and losses a no brainer?”

Arm’s length range – what does it really mean?

In South Africa, it seems that the unspoken rule is that the interquartile range (IQR) is the arm’s length range. To qualify this statement, I am only referring to a margin derived from a benchmarking study that uses external comparables.

Why is this important? Let me start by explaining what an arm’s length range is. As mentioned by the OECD Guidelines, transfer pricing is not an exact science and therefore it is likely that certain methods can produce a range of outcomes or observations which are equally reliable. For the purpose of this blog post, we are really considering the cost plus method, resale price method or transaction net margin method. There could be many reasons as to why there are different results from our observations, in the form of a margin or price. For example, there could be geographical differences which may have certain location savings, or there may be a small difference in the products or services sold. But there are also commercial reasons as to why different comparable third parties may charge a different price for a comparable product or service in the same region. Continue reading “Arm’s length range – what does it really mean?”

And we are back

I am excited to let you know that we are back and that we have additional writers contributing now on a more permanent basis. Introductions will be made with the new blog posts, but for now, stay tuned. As always, if you have any suggestions please comment or send a message.

Also, I look forward to seeing you tomorrow at our TP Seminar.

Transfer pricing seminar – The must do’s and should do’s for 2018

The last few years have seen significant developments in the world of Transfer Pricing, including the Base Erosion and Profit Shifting project, the practical measures revenue authorities around the world have taken to implement the recommendations and increased levels of audit activity and Transfer Pricing court cases globally.

Closer to home, Transfer Pricing is top of mind for our Minster of Finance, the Commissioner of SARS and our politicians, and it should be high on the list of your priorities for 2018 too!

In this complimentary and interactive seminar to be held on Thursday the 15th of March, Grant Thornton’s Transfer Pricing team and external speakers will:

  • take attendees through the latest South African Transfer Pricing compliance requirements
  • differentiate between what taxpayers must do and should do from a documentation perspective
  • highlight what disclosures are required in the annual tax return discuss the practical considerations of implementing Transfer Pricing in a business
  • provide insight into what strategies should be employed for Transfer Pricing disputes and litigation
  • suggest how they can assist taxpayers in managing their Transfer Pricing compliance

If you are interested in joining me for the above, please register here. The seminar is free of charge and I hope you will come to enjoy a cup of coffee while chatting about TP.

Transfer pricing master file and local file submission requirements finalised in South Africa

The South African submission requirements for a master file and local file have been finalised. The only change to the previous draft submission requirement is the effective date, which is now set as financial years starting on or after 1 October 2016 (instead of 1 January 2016). The master file and South African local file will have to be submitted to SARS 12 months after financial year end, meaning the first reports (files) are due to be submitted on 30 September 2018.

The overall threshold for master file and local file requirements stayed at R100 million. Please keep in mind the R100 million is the gross amount of all cross border related party inbound and outbound transactions added together and includes capital loan balances. In addition, there are also separate transfer pricing documentation retention requirements which should be considered together with the master file and local file requirements.

It may seem that there is still ample time to meet such deadlines, but a master file and local file project (and potentially additional info as per the transfer pricing documentation retention requirements) is time consuming. We recommend to start planning for such a project as soon as possible, especially, where no transfer pricing policy or previous transfer pricing report (file) is in place and this may be the first time you are undertaking such an exercise.

Transfer Pricing Seminar 3/2017

It is time for the next Grant Thornton transfer pricing seminar in our series. This seminar will focus on transfer pricing implications in relation to intangible and financial transactions. For more information or to register and attend for free, click here.

Hope to see you there.