Tax Treaty Case Law around the Globe 2022

13.1. Introduction

The ABC (Pty) Ltd (ABC Ltd) v. Commissioner for the South African Revenue Service case is a Tax Court judgment and, therefore, creates no precedent in South Africa. Despite the lack of precedential value, this case is the second transfer pricing case in South Africa and is, therefore, of relevance. The case was brought before the Court by way of an application by the taxpayer for a separation of issues, but this application necessitated a deeper examination of the transfer pricing adjustment process and the reliance on the OECD Transfer Pricing Guidelines (OECD Guidelines) by the South African Revenue Service (SARS).

S. 122It should be noted that this case concerns the transfer pricing provision as it read up to 2011 before amendment to modernize the transfer pricing rules “in line with the guidance provided by the OECD”.

13.2. Facts of the case

The taxpayer was involved in the manufacture, importing and sale of chemical products. Its one division produced catalytic converters. The manufacturing process required metals (referred to as the precious group of metals (PGMs)). These were sourced from a Swiss entity (acknowledge by both the taxpayer and the revenue authoriti...