Transfer pricing in South Africa

Transfer pricing in South Africa at a glance

Regulation Type National regulations based on OECD Guidelines
Are there specific transfer pricing regulations? Yes
Submission deadline N/A
Submission deadline upon request Directly
Annual update required No
Official language requirements English
Potential impact of penalties N/A

 

South African tax law

Rules for transfer pricing in South Africa are based upon:

  • Income Tax Act 58 of 1962

OECD

South Africa is not a member of the OECD but their regulations are, however, largely based on the OECD Transfer Pricing Guidelines.

Methods

Accepted methods

Accepted methods are:

  • the comparable uncontrolled price method
  • the resale price method
  • the cost plus method
  • the profit split method
  • the transactional net margin method

Priority of methods

Rules for transfer pricing in South Africa do not prescribe a specific priority of methods. However, a taxpayer should choose the most reliable method.

Documentation requirements

Information that should be included in the documentation:

South African regulations are unclear about the documentation requirements. However, the Income Tax Act states that a taxpayers should provide evidence on the arm’s length nature of cross-border related party transactions.

Language

Officially taxpayers may submit their documentation in any of the eleven official languages of South Africa. However, usually documentation is provided for in English and English is also the language used by the South African Tax Authorities.

Requirements to prepare documentation annually

In South Africa taxpayers are not obliged to update their documentation annually. 

Submission deadline upon request by tax authorities

Upon request of the Tax Authorities, a taxpayer should submit its documentation directly.

Advance Pricing Agreements

General

In South Africa it is not possible to obtain an Advance Pricing Agreement.

Terms 

Not applicable.

Penalties

In South Africa no specific transfer pricing penalties are in place, meaning that ordinary penalties apply.

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