Big tax change coming for companies operating in South Africa

• The proposed tax change for companies operating in South Africa involves replacing the 20% related-party transaction rule with a domestic transfer pricing system.
• The new system will focus on whether related-party transactions are conducted at arm's length, rather than automatically removing the tax incentive when transactions exceed a set threshold.
• The change aims to prevent companies from shifting profits from entities paying the standard corporate tax rate into lower-taxed SEZ companies, and is expected to affect companies conducting legitimate business with related companies.