South Africa Urges African Transfer Pricing Advances
During a recent speech in Pretoria to the High Level Conference on Illicit Financial Flows, South African Minister of Finance Pravin Gordhan noted that tax code improvements are required in African countries so that multinational enterprises (MNEs) “pay their fair share of taxes in the countries where they generate their profits.”
On the subject of “transfer mispricing and other practices” by MNEs in Africa, which “result in a substantial erosion of a country’s tax base,” he commented that, although MNEs must also “take active steps to stop aggressive tax structuring practices, … there is a need to strengthen tax legislation.”
“South Africa’s transfer pricing legislation was first introduced in 1995 and we are still building our capacity in this regard some twenty years later,” Gordhan pointed out. “The journey has had its successes, with several adjustments to transfer prices in excess of ZAR1bn (USD70m) each.”
In addition, he noted that “the use of complex ownership structures is now the most commonly-used means of hiding ownership and control of assets. It is in the interest of Africa that we quickly develop our capacity to implement the concept of beneficial ownership.”
International cooperation and coordination are also key, he added, with implementation of “the OECD’s Common Reporting Standards, for example, facilitating global transparency and the exchange of information for tax purposes.”
