Transfer pricing adjustments : the different types, practical challenges and recommended approaches-a South African perspective

Abstract

This article concerns the tax policy and practical challenges that arise from applying the various transfer pricing adjustments. The lack of clear international guidelines on how to address some issues regarding transfer pricing adjustments and the diverging policy positions that some countries have taken, pose uncertainties for taxpayers and tax disputes which can impede international trade. These challenges are addressed in the article by focusing on the South African position and providing recommendations on how to resolve some of them. The explanation of the murky issues regarding transfer pricing adjustments will be found instrumental for developing countries where the legislation, administration and practice of transfer pricing are not yet well developed. The article’s focus is on South Africa, an emerging economy on the African continent, which is used as a base for many MNEs that invest in the rest of Africa. It will be useful for foreign investors to gain an understanding of South Africa’s position on transfer pricing adjustments.