It was indeed a relief that we had a budget speech as scheduled and without major disruptions. Although not being the main focus point of the post budget media discussions (the increased VAT rate won that prize), there is a strong emphasis in the budget proposals on increased enforcement of rules and regulations governing transfer pricing and cross border transactions, that may result in profit shifting.

South Africa’s transfer pricing legislation came into effect on 1 July 1995 and was followed by Practice Note 2 and Practice Note 7. These provided taxpayers with guidance on how the South African Revenue Service (“SARS”) intended to apply the legislation, including certain guidelines on transfer pricing documentation, which was largely based on the Organisation for Economic Cooperation and Development (“OECD”) transfer pricing documentation guidelines. This remained the only point of reference for taxpayers and transfer pricing service providers until recently.