Translation of transfer pricing adjustments in South Africa: A seemingly insignificant detail

by | Mar 10, 2024 | SAMLJ, SAMLJ V35 I2

Translation of transfer pricing adjustments in South Africa: A seemingly insignificant detail

Author: Michelle van Heerden

ISSN: 1996-2185
Affiliations: Senior Lecturer, Department of Accountancy, University of Johannesburg
Source: South African Mercantile Law Journal, Volume 35 Issue 2, 2023, p. 190 – 212
https://doi.org/10.47348/SAMLJ/v35/i2a4

Abstract

The South African rand is one of the most volatile currencies in the world — at times the most volatile. To this is added a further area of uncertainty, namely the tax implications relating to transfer pricing. Section 31 of the South African Income Tax Act does not have any specific foreign currency translation rules. The general rule in s 25D of the Income Tax Act is therefore applicable, which provides for the translation of foreign currency to rand using the spot rate. However, given the nature of transfer pricing transactions, it raises the question whether the spot rate is indeed appropriate. The purpose of the study was to investigate South Africa’s translation rules and to seek guidance from an international perspective. The research design was non-empirical, adopting an interpretative paradigm, together with a doctrinal research methodology. The conclusion of this study is that the translation rules concerning transfer pricing adjustments have seemingly been overlooked. The study recommends a legislative amendment of s 31 and proposes that transfer pricing adjustments are converted using the average rate of exchange for the year of assessment to which the adjustments relate, as such an amendment will lead to certainty, equity and convenience.

South African governance legal framework for corporate disclosures and reporting: Part 2—Mandatory financial disclosure and reporting

by | Mar 10, 2024 | SAMLJ, SAMLJ V35 I2

South African governance legal framework for corporate disclosures and reporting: Part 2—Mandatory financial disclosure and reporting

Author: Werner Schoeman

ISSN: 1996-2185
Affiliations: Lecturer, Mercantile and Labour Law Department, University of Limpopo
Source: South African Mercantile Law Journal, Volume 35 Issue 2, 2023, p. 213 – 231
https://doi.org/10.47348/SAMLJ/v35/i2a5

Abstract

In this second part of this article, I focus on the efficacy of the framework for mandatory financial disclosure and reporting. In particular, I investigate the governance of auditors within the corporate jurisprudence. Independence of auditors remains contentious in the light of the funding model of the regulator, functioning of audit committees and the connection between directors and companies.

Case Notes: Is the foreign business establishment lagging behind new business models? Commissioner for the South African Revenue Service v Coronation Investment Management SA (Pty) Ltd [2023] ZASCA 10

by | Mar 10, 2024 | SAMLJ, SAMLJ V35 I2, Uncategorized

Case Notes: Is the foreign business establishment lagging behind new business models? Commissioner for the South African Revenue Service v Coronation Investment Management SA (Pty) Ltd [2023] ZASCA 10

Author: Khodani Sengwane

ISSN: 1996-2185
Affiliations: Lecturer, University of Pretoria
Source: South African Mercantile Law Journal, Volume 35 Issue 2, 2023, p. 232 – 240
https://doi.org/10.47348/SAMLJ/v35/i2a6

Abstract

None

Digital platform workers and the conundrum of the definition of an ‘employee’ in the era of the Fourth Industrial Revolution

by | Jan 28, 2024 | SAMLJ, SAMLJ V35 I1

Digital platform workers and the conundrum of the definition of an ‘employee’ in the era of the Fourth Industrial Revolution

Author: Ntando Ncamane

ISSN: 1996-2185
Affiliations: Lecturer, Mercantile Law Department, University of the Free State
Source: South African Mercantile Law Journal, Volume 35 Issue 1, 2023, p. 1 – 26
https://doi.org/10.47348/SAMLJ/v35/i1a1

Abstract

There have been many levels of digital transformation from the First, Second and Third Industrial Revolutions. The most advanced level of technology, known as the Fourth Industrial Revolution (4IR), is currently being encountered. The 4IR introduces technologies such as artificial intelligence, big data, robotics, etc. These 4IR transformational technologies also brought the emergence of the gig economy, which enjoyed enhancement by technologies of the 4IR such as big data, that improved the lives of both digital platform workers and consumers worldwide. The gig economy relies on two key role players, namely the consumer, and the digital platform worker. This is evident as there is outsourcing of work done through Internet-based platforms such as Uber Eats, Mr Delivery, Bolt and Airbnb. The Covid-19 outbreak significantly impacted the growth of the digital economy and increased the number of digital platform workers. However, digital platform workers are not protected by labour and social security laws in South Africa. This is because these workers do not qualify to be regarded as ‘employees’ within the labour law framework. For example, s 213 of the Labour Relations Act of 1995 and s 1 of the Basic Conditions of Employment Act of 1997 provide for a definition of an employee to the exclusion of independent contractors and, unfortunately, digital platform workers are categorised as independent contractors. This article notes that this exclusionary definition does not accord with the intent and purposes of s 23 of the Constitution of the Republic of South Africa, 1996. The article further notes that the limited definition of an employee exposes digital platform workers to challenges such as unfair labour practices and unconducive working conditions, which are also unsafe and unhealthy sometimes. Owing to digital platform workers not being regarded as employees, they also do not enjoy social protection and can therefore not receive social security benefits such as unemployment benefits when they lose their jobs. As it stands, digital platform workers are independent contractors. The introduction of 4IR and the Covid-19 outbreak have made the world dependent on the gig economy and therefore this article argues that this frequent use of the gig economy necessitates the extension of the definition of ‘employee’ to include digital platform workers. This will ensure a definition that encapsulates the changing times in the workplace as a result of technology.

South Africa’s NINA debtor plight: Lessons from the Scottish consumer debt relief system post the Covid-19 pandemic

by | Jan 28, 2024 | SAMLJ, SAMLJ V35 I1

South Africa’s NINA debtor plight: Lessons from the Scottish consumer debt relief system post the Covid-19 pandemic

Authors: Shammah Boterere & André Boraine

ISSN: 1996-2185
Affiliations: Postdoctoral Fellow, Faculty of Law, University of Pretoria; Professor, Department of Mercantile Law, University of Pretoria
Source: South African Mercantile Law Journal, Volume 35 Issue 1, 2023, p. 27 – 48
https://doi.org/10.47348/SAMLJ/v35/i1a2

Abstract

In this article, the authors consider the plight of the so-called No Income No Asset (NINA) debtors against the backdrop of debt relief measures provided for this category of debtors who find themselves in a debt trap. It is a well-known fact that South African insolvency law does not provide sufficient debt relief measures for all types of debts, and those, like the NINA debtors, who are effectively excluded from the relief afforded by the sequestration and ultimately rehabilitation procedures of the Insolvency Act 24 of 1936 have no proper statutory measure to provide a discharge of debt in instances where they may desperately need it. It is submitted that the debt restructuring mechanisms provided by the administration procedure and debt review measure, are not sufficient since these do not offer a discharge. Reference is made to the newly proposed debt intervention procedure that may provide some relief in this regard, but it is argued that the legislature needs to consider further procedures to deal with their plight. With the view of making some recommendations for reform, aspects of mainly the Scottish system of debt relief measures are also considered.

The impact of regulatory pluralism and complexity on the governance of state-owned companies in South Africa

by | Jan 28, 2024 | SAMLJ, SAMLJ V35 I1

The impact of regulatory pluralism and complexity on the governance of state-owned companies in South Africa

Author: Tebello Thabane

ISSN: 1996-2185
Affiliations: Senior Lecturer, Commercial Law Department, University of Cape Town
Source: South African Mercantile Law Journal, Volume 35 Issue 1, 2023, p. 49 – 73
https://doi.org/10.47348/SAMLJ/v35/i1a3

Abstract

This article outlines and critiques the regulatory universe applicable to state-owned companies (SOCs) in South Africa. It argues that the governance of SOCs occurs within a plural regulatory universe characterised by an intricate system of norms, principles, and practices that are engendered, monitored, and enforced by state and non-state actors. The article further argues that the complexity of the regulatory universe is one of the main causes of weak governance in SOCs. This argument is premised on the realisation that a coherent, predictable, efficient, and accessible regulatory universe enables compliance and sound corporate governance. In evaluating the regulatory universe, this article follows two lines of inquiry: the first is a doctrinal and principled approach, and the second is an instrumental, policy orientated, and forward-looking analysis. The article concludes that the regulatory universe of SOCs is not only plural and complex but also incoherent and fragmented, resulting in onerous over-regulation, regulatory quandary, and uncertainty, which collectively negatively impact the quality of governance.