Abstract

IT 14302, a decision of the Tax Court, is the first South African judgment dealing with the substantive application of the transfer pricing provisions in the Income Tax Act. The decision addresses the application of the transfer pricing provisions to cross-border payments for the use of intellectual property, specifically from foreign subsidiaries to a South African company. The article considers the use of terminology such as brand, goodwill and intellectual property by the parties and the court in determining the tax liability of the taxpayer and second, the application of the transfer pricing methodologies to determine the arm’s length price for the ‘good’ licensed by the South African taxpayer company to its associated foreign subsidiaries.