Author: Billy Joubert (Deloitte) South Africa’s transfer pricing rules changed radically for years of assessment starting on or after 1 April 2012. This means that the consequences of such an adjustment being made now are very different, depending on whether the adjustment relates to a year of assessment commencing before – or after – 1 April 2012. Perhaps the most fundamental change was in relation to the mechanics for making transfer pricing adjustments. As regards the consequences of TP adjustments, these are also now very different. Many of the TP adjustments currently being made or contemplated relate to years of assessment commencing before 1 April 2012. For ease of reference we shall refer to such years as old years.
Section 31 of the Act, dealing with transfer pricing, was substituted with effect for years of assessment commencing on or after 1 April 2012. The substituted provision is different to its predecessor in a number of important respects.
In recent years international lawyers and accountants have built a web of corporate opacity which has enabled tax avoidance and corruption on an alarming scale. Private financial wealth sitting on tax havens has grown to around US$ 21 trillion, of which $9trillion is from developing countries. Some minuscule jurisdictions, such as the Cayman Islands, have become the legal home to trillions of dollars of corporate assets, offering the unbeatable attractions of zero taxation plus secrecy. Some industries are now dominated by them: half the world’s shipping is registered there.