CATEGORIES
- (1) Negotiating Tax Debt and Payment Arrangements with SARS
- (34)Accounting
- (1)Accounting for Income Tax
- (2)Accounting for Income Tax
- (8)Administration of Estates
- (1)Advisory Services
- (1)Application of tax rates, s6(2) rebates
- (1)Assessed losses
- (4)Audit, Reviews & Other Services
- (9)Blogs
- (8)Capital Gains Tax
- (1)Capital Gains Tax - Individuals Tax
- (1)Capital Gains Tax Implications of Trusts
- (2)Case study: Home office expense
- (1)Case study: Travel allowances
- (1)Company Formations
- (1)Compliance
- (123)Corporate Tax
- (9)Customs and Excise
- (2)Deceased Estate
- (1)Deductions Pre-trade and prepaid expenses
- (1)Deregistration
- (2)Employer and Employee (PAYE and UIF Specific)
- (1)Estate Duty
- (1)Events / Webinars
- (10)Faculty News
- (2)Farming
- (152)Individuals Tax
- (1)Input - Customs Duty
- (3)Interest
- (13)International Tax
- (17)Legislation
- (1)Low interest rate loans and loan subsidies
- (1)Nature of the rights of beneficiaries
- (1)Notional input tax
- (9)Payroll
- (2)Practical Payroll
- (2)Provisional tax (Link with other Taxes)
- (2)SARS Dispute Resolution
- (4)SARS Issues
- (1)Salaried Employees
- (135)Tax Administration
- (2)Tax Administration Part 2B: Resolving Problems with SARS using the Tax Ombud
- (1)Tax Administration Part 3B Dispute Resolution - Objection and appeal
- (3)Tax Update
- (1)Tax implications of loans to trusts
- (1)Tax residence
- (1)Tax returns and payments
- (2)Transfer-Pricing
- (1)Trust Income / Gain Allocations
- (1)Trust types and income allocations
- (6)Trusts
- (72)VAT
- (3)VAT periods
- (1)Wear and tear allowances
- (1)Wills, Estates & Trusts
- (1)Zero Rated
- (1)eFiling
- Show All
Global transfer pricing risk management
- 28 September 2016
- Corporate Tax
- Okkie Kellerman
Important:
This article is based on tax law for the tax year ending 28 February 2017.
Author: Okkie Kellerman (ENSafrica)
The realities of the business environment in which multinational groups operate today consist of a shrinking domestic market and an ongoing pressure to reduce costs. In addition, multinational groups are also faced with the different expectations of different stakeholders and the increased disclosure requirements of financial data. It seems that many multinational groups may have risk management structures in place, but often lack proper control mechanisms.
Transfer pricing governance needs to be based on the strategic goals and aims of transfer pricing, and multinational groups must consider how to manage their transfer pricing risks and processes to achieve the these goals. It is important to identify individuals within a multinational group who understand transfer pricing and ensure that there is constant communication between these individuals.
At the same time, the management of multinational groups needs to handle the expectations of various stakeholders such as shareholders, banks, tax authorities, auditors and the general public. While shareholders expect a high net profit, public society and tax authorities expect companies to pay their fair share of taxes, while banks also expect proper transparency and auditors expect reasonable tax assurance.
Multinational groups need to understand that contemporaneous documentation is an essential requirement for transfer pricing compliance, that centralised business structures and the use of hybrid entities are being looked at intensely by all tax authorities and that audit trails have to be maintained at the time of preparing the transfer pricing policy.
Multinational groups need to increase the efficiency of their transfer pricing compliance and manage their risks by evaluating their existing transfer pricing processes, determine the best practices required and develop an action plan to bridge any gaps. Better transparency will affect the tax planning of employees and improve communications with all stakeholders.
This article first appeared on ensafrica.com.