The transfer pricing (TP) provisions, contained in section 31 of the Income Tax Act (ITA) of South Africa, are applicable to “affected transactions”. Affected transactions are regarded as being cross border transactions between “connected persons” where any term or condition to that transaction differs from that which would have existed had those persons been independent and dealing at arm’s length.

Connected persons in relation to a company includes any shareholder that holds at least 20% of its shareholding where no other company holds a majority or any majority shareholder (i.e., shareholding of at least 50%) or where a company holds at least a 50% shareholding in the other company.

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