The possible introduction of advance pricing agreements in South Africa income tax legislation

This treatise analyses the suitability of the Advance Pricing Agreements (APA) for the South African Transfer Pricing legislation. The transfer pricing legislation places emphasis on the arm's length principle. Determining an arm's length price is problematic and as a result some countries have resorted to APA's to establish an arm's length price up-front, and thus avoid reviews and subsequent audits. The treatise first focuses on the transfer pricing provisions and other relevant applicable sections of the Act from the South African point of view, and it then examines the current status quo, i.e. the review processes used by the South African Revenue Services (SARS) as detailed in the Organisation of Economic Co-operation and Developments (OECD) Guidelines and the SARS Practice Note. Since negotiated tax treaties form part of the South Africa law, the impact of these treaties are discussed in Chapter 4. The treatise discusses in detail an APA from the OECD's point of view. It examines the objectives of an APA; the benefit and the shortcomings of using an APA. It then examines the APA request processes from a Canadian perspective and the administration of the APA from an USA perspective. The treatise examines South African trading partners using APA in transfer pricing matters, with reference to the effects and the challenges such countries face. The treatise concludes by looking at the benefits provided by use of an APA by South African major trading partners. The effect and the use of such APA will have in South Africa is also discussed and how it should be modelled; the present status quo with regard to personnel at SARS; and the possible impact the introduction and implementation will have in South Africa