In terms of the South African Income Tax Act, 1962 (the
"Act"), transfer pricing adjustments are
made in circumstances where multinational entities transact at
prices that do not reflect prices expected to be charged if parties
to the transaction were independent persons dealing at arm's
length.
Base Erosion and Profit Shifting
("BEPS") refers to tax planning
strategies that shift profits from high tax jurisdictions like
South Africa to locations where little or no corporate tax is being
paid.
In order to provide governments with the necessary domestic and
international instruments to prevent companies from paying limited
amounts of taxes, the Organisation for Economic Co-operation and
Development ("OECD") formulated the BEPS
Action Plan at the request of the G20. The BEPS Action Plan applies
to all OECD member countries as well as G20 countries. In addition
to this, countries that are not members of the OECD or the G20,
such as South Africa, can also follow the
