Maduka, Nyasha Philipa2022-01-052022-01-052021https://hdl.handle.net/10539/32579A research report submitted in partial fulfilment of the requirements for the degree of Master of Commerce (Taxation) to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, 2021This research report aims to investigate if South Africa's legislation on transfer pricing is adequate and capable of limiting South Africa's tax base erosion. With the improvement in technology as well as the global interaction of markets, global trade over the past few decades also saw an exponential increase. Consequently, parties in different jurisdictions began transacting with each other and the nature of such transactions included foreign business operations being set up in South Africa to render services to South Africa. These transactions are called inbound transactions. Similarly, South African businesses began trading in other parts of the world and these are termed outbound transactions. Inbound and outbound transactions are referred to as "cross border transactions "l and these include business and investment transactions, which take place across borders2 . These transactions present an income tax challenge, as they are capable of attracting tax in more than one country. Furthermore, the interaction of tax laws of different jurisdictions has presented opportunities for businesses to order transactions in a manner that can avoid or reduce tax in the jurisdictions at play3 Through literature review, the research report finds that the Income Tax Act (ITA) is adequate in ensuring that South Africa safeguards its fiscus in collecting all revenue due to it and is not a catalyst for the manipulation of profits in related party transactions. This finding derives substance from the fact that section 31 of the ITA was over the years, regularly reviewed and updated to align it to the OECD recommendations. As Munyaradziwa Ratombo and Roy Blumenthal explained, section 31 is aligned to global standards and extends the revenue authority of South Africa's "power to adjust not just the consideration but also the terms and conditions of non-arm's length transactions". Furthermore, the developments in international tax law will guide South Africa in better applying the international standards regulating transfer pricing.enThesis