INTERNATIONAL TAX

Transfer pricing refers to the internal price tags companies set for goods and services traded between their subsidiaries in different countries. This practice is particularly relevant for Multinational Enterprises (MNEs) with a global presence. While transfer pricing offers flexibility for managing internal operations, it`s crucial to ensure these prices are set fairly. There`s a potential risk of companies manipulating these prices to shift profits to countries with lower tax rates as identified in the OECD BEPS Actions 8 - 10. The OECD Multilateral Instrument contains specific provisions that seek to prevent this form of base erosion and there are many examples of domesticated specific anti-avoidance provisions around the world`s jurisdictions.

In SA, if the Transfer Price is at variance with the "Arm`s Length Price", SARS is empowered to invoke section 31 of the Income Tax Act 58 of 1962 and correct what it considers to be a serious erosion of the SA Tax Base. Should this occur, depending on the circumstances, penalties (to various degrees) and interest will be levied. The cost of non-compliance is therefore steep. It should be noted that the determination of an "arm`s length price" is not a simple task and there are different methodologies to be applied in different commercial settings in developing the Transfer Pricing Policy for an MNE. As such, parties to a cross-border transaction can easily fall foul of the arm`s length principle without the intention to erode any tax base.

The guidance of a Transfer Pricing expert should therefore be sought when parties (especially connected persons) conduct cross-border transactions. It is also recommended for MNEs or similar cross-border connected structures to have a Tax Risk Committee that conducts ongoing compliance monitoring.

The rules regarding taxation are based on residency. If you are a South African Tax Resident, then you are taxed on your worldwide income. If are not a South African Tax Resident, then you are taxed on your South African sourced income. Where South African Tax Residents are working aboard or have dual residency, then considerations of any Double Taxation Agreements and the application of the foreign income exemption must be considered when determining your total South African tax liability. Should SARS issue a verification or audit against yourself as a South African Tax Resident working abroad, PSE is uniquely placed to advise and dispute any incorrect determination made by SARS as a result of your resident working abroad status.

Through our team of qualified South African and Mauritian commercial attorneys, we offer advisory and drafting services to negotiate, structure, and draft various types of legal contracts with a focus on the laws applicable in South Africa, Mauritius, and various countries in sub-Saharan Africa.

• Sale of Business & Shares
• Employment and Independent Consultancy
• Shareholders and Partnership Agreements
• Leases, Intellectual Property related agreements, and Agency Agreements
• Joint Venture Agreements
• Outsourcing Agreements and Loan Agreements
• bespoke Trust Deeds for purpose trusts and family wealth management family trusts

With primary focus on South African and Mauritian tax law from an international perspective. In addition, through its associated service providers, we are able to advise on the tax laws applicable in Seychelles, Malta, the USA, Dubai and various sub-Saharan countries such as Mozambique, Malawi, Zambia, and Zimbabwe.

Our tax advisory and structuring services include educating clients regarding the tax rules applicable to individuals, trusts, and companies in all areas, including,

• employees` tax
• income tax
• various withholding taxes
• capital gains tax
• dividend tax
• Country-specific expatriate taxes
• anti-avoidance rules
• tax residency rules
• tax incentives
• tax compliance
• the use of Double Taxation Agreements

We advise clients on the various laws applicable to individuals who wish to emigrate from South Africa and immigrate to countries such as Mauritius, Malta, the USA, and Dubai.

We will assist with:

• advice on the legal, tax, exchange control, residency, and other planning issues involved
• assisting with the execution of your emigration or immigration, including obtaining work permits and residency permits in the USA, Mauritius, Dubai, and Malta,
• processing the financial emigration by South African residents through the South African Reserve Bank
• tax and estate planning in your new country of residency

Exchange controls refer to measures that are enforced by governments to manage the movement of currency into and out of a country. These measures may involve limitations on the transfer of money, caps on the amount of currency that can be exported from a country, or stipulations that must be met before a currency exchange can occur.

The regulations regarding exchange control in South Africa determine the amount of money that can be transferred out of the country and the conditions under which such transfers can be made. It is crucial to note that these regulations are applicable to individuals and legal entities who are considered residents of South Africa. A person or corporation is regarded as a resident for exchange control purposes if they have established permanent residence or are registered in South Africa. As a result, such entities must abide by the rules governing exchange control.

We, as a firm, are able to assist in regard to compliance with exchange control regulations, Disputes with SARS, transfer of funds, Penalties, fines or business transactions.

With an established network of trusted license service providers in the jurisdiction of Mauritius, Seychelles, BVI, Hong Kong, Guernsey, Jersey, Isle of Man, Dubai, Cyprus, UK, USA, Barbados, and the Cayman Islands, we offer a comprehensive range of offshore services, from the establishment of trusts, foundations and companies to foreign trading structures, director services, passive investment structures, as well as protector and enforcer services.

SARS is clamping down on crypto transactions, leveraging international data-sharing agreements and intensifying enforcement efforts. Undeclared crypto income can trigger audits, penalties, and legal consequences. TRM provides expert tax advisory on structuring, VDP applications, SARS audits, and dispute resolution-helping individuals and businesses minimise risks and optimise tax efficiency.

Beyond compliance, tokenisation is reshaping financial markets. While TRM does not originate tokens, we provide strategic guidance on the tax treatment of tokenised assets, including Section 223 opinions for those acquiring or holding RWAs. Whether you`re dealing with tokenised real estate, commodities, or financial instruments, we help you navigate regulatory uncertainty and structure your holdings for compliance and efficiency.