PROVISION OF THE TRANSFER PRICING BENCHMARKING

Transcript:PROVISION OF THE TRANSFER PRICING BENCHMARKING:
PROVISION OF THE TRANSFER PRICING BENCHMARKING TOOL Briefing Session 06 August 2020 at 12H00 RFP No RFP 0031/2019 Closing Date 25 August 2020, 11h00 Welcome and Introduction RFP Timelines Background and Scope of Work Bid Evaluation Process Price & BBBEE Draft SLA RFP submission and contact details Meeting Closure Table of Contents 2 Bid Evaluation Committee 3 4 Welcome and Introduction RFP Timelines Background and Scope of Work Bid Evaluation Process Price & BBBEE Draft SLA RFP submission and contact details Meeting Closure Table of Contents RFP Timelines 5 6 Welcome and Introduction RFP Timelines Background and Scope of Work Bid Evaluation Process Price & BBBEE Draft SLA RFP submission and contact details Meeting Closure Table of Contents 7 Background and Scope of work The term transfer pricing describes the process by which entities set the prices at which they transfer goods or services between each other. The transfer prices adopted by a multinational have a direct bearing on the proportional profit it derives in each country in which it operates. If a non-arm’s value (inadequate or excessive consideration) is paid for the transfer of goods or services between the members of a multinational, the income calculated for each of those members will be inconsistent with their relative economic contributions. This distortion will impact on the tax revenues of the relevant tax jurisdictions in which they operate. Since South Africa’s re-emergence in the international market, there has been a marked expansion of international trade and commerce, with wide-ranging changes in volume and complexity. An increasing proportion of this international activity is carried on between members of multinationals. As the globalisation of business activity continues to accelerate, protecting the South African tax base is vital to South Africa’s wealth and development. Exchange controls have historically provided some protection against the more significant manipulation of transfer prices to transfer profits to lower tax jurisdictions. In anticipation of the relaxation of exchange controls and the envisaged adverse effect on the South African tax base, section 31 was introduced into the Act in 1995. 8 Background and Scope of work Section 31 provides that where any transaction, operation, scheme, agreement or understanding constitutes an affected transaction and results or will result in any tax benefit being derived by a person that is a party to that transaction, operation, scheme, agreement or understanding, the taxable income or tax payable by any connected person that derives