A critical analysis from a South African perspective of advance pricing agreements for multinational enterprises
Date
2017
Authors
Gray, Mariska
Journal Title
Journal ISSN
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Abstract
Tax Base Erosion and Profit Shifting (BEPS)1 has become an epidemic of global
legal tax avoidance being used by Multinational Enterprises (MNEs). BEPS has
resulted in the structuring of transactions within groups of companies, with these
including: transfer pricing, manipulating prices of goods, services, management fees,
professional fees, royalties, interest and dividends.
This study is a critical analysis of South African legislation in relation to the Double
Taxation Agreement (DTA) with the United Kingdom (UK). Reference is made to the
Mutual Agreement Procedure (MAP) as proposed by the Organisation for Economic Co-operation and Development (OECD).2 Even though South Africa follows the OECD guidelines (2010),3 Advance Pricing Agreements (APA) are not included in
South African legislation, which may result in double non-taxation or double taxation
and disputes. Recourse in the event of double taxation is examined in this research
report.
The application of APA legislation in the UK, as a leading tax authority,4 is analysed,
as well as Davis Tax Committee recommendations in relation to Transfer Pricing.
KEYWORDS
Advance Pricing Agreement, Arm’s length price, Base Erosion and Profit Shifting,
Davis Tax Committee, Double Taxation, Double Taxation Agreement, Multinational
Enterprises, Mutual Agreement Procedure, OECD, South African Revenue Service,
Transfer Pricing.
1 Organisation for Economic Co-operation and Development (OECD). (n.d.a), ‘About BEPS and the inclusive framework’, <http://www.oecd.org/ctp/beps-about.htm>, retrieved 5 November 2016. 2 Organisation for Economic Co-operation and Development (OECD). (2010b), Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. Paris: OECD. 3 Supra note 2. 4 Broomberg, E. B. (2007), Tax avoidance then and now, Tax Planning Corporate and Personal, vol. 21, no. 5, pp112-118.
Description
A research report submitted to the Faculty of Commerce, Law and Management,
University of the Witwatersrand, Johannesburg, in partial fulfilment of the
requirements of the degree of Master of Commerce (specialising in Taxation), Johannesburg, 2017
Keywords
Citation
Gray, Mariska (2017) A critical analysis from a South African perspective of advance pricing agreements for multinational enterprises, University of the Witwatersrand, Johannesburg, <https://hdl.handle.net/10539/24371>