International transfer pricing developments: South Africa

South Africa (SA) has existing transfer pricing rules which require that transactions for the supply of goods and services between SA residents and non-residents who are connected persons in relation to one another must be conducted at arm’s-length prices. The wording of the current rules focuses on isolated transactions and the adjustment of the consideration charged for specific transactions as opposed to overall arrangements driven by an overarching profit objective.

The current transfer pricing rules are to be amended with effect from 1 October 2011 to bring them into line with the transfer pricing concept found in double tax treaties which provides for the proper allocation of profits between tax treaty partners where the terms and conditions of transactions between associated enterprises differ from the terms and conditions that would have occurred between independent...