Transfer price debate
DEAR SIR — It is unfortunate that the decision by the South African Revenue Service (SARS) to distance itself from the comments made by a presenter at the 2nd Annual Africa Transfer Pricing Summit created the resulting negative reaction and perception about SARS’ position on the matter (Tax delegates aghast as SARS storms out, Sept 6).
The issue of transfer pricing is very complex, and is not only a technical tax issue, but rather a broader socioeconomic challenge facing Africa today.
It is for that reason that the annual summit invited participation by all stakeholders affected by transfer pricing. The objective of this year’s summit was to celebrate the fact that Africa was positioning itself as an investmentfriendly continent.
As the organisers, we strove to solicit constructive dialogue to highlight and debate the pertinent challenges brought about by such a policy. Of particular concern is investor exploitation of the economies on the continent, as well as other economic challenges that have presented themselves post-colonial rule.
It is regretful that the technical disagreement at the summit last week resulted in yet another blunt stick conveniently being grabbed to beat the South African government and SARS. The leadership of the South African Institute of Tax Practitioners took the informed decision to terminate the remainder of the session on Thursday afternoon after consulting with the delegates present.
Some delegates raised the issue that terminating the workshop in effect stifled the constitutional right to freedom of speech. It is certainly a right we need to safeguard. However, as a community of expert tax professionals, we need to apply such a right with the requisite diligence and circumspection.
Tax experts will embark on a dangerous trajectory if our right to freedom of speech is not balanced, and particularly 100% accurate. Any technical advice on a public platform which is not accurate, may infringe other constitutional rights, which in itself may be challenged as unconstitutional. At that moment on Thursday afternoon, the leadership was faced with the difficult task of evaluating the technical disagreement, considering our constitutional values of freedom of speech and evaluating its effect against the backdrop of the other 95% members not present at the summit, albeit coming to a conclusion that is in the best interest of the collective.
We must remind ourselves that the Institute is an expert community of tax professionals, and cannot participate or be seen to facilitate destructive dialogue and create dissent.
As a responsible civil organisation actively working with government to resolve operational and legislative challenges faced by our tax expert members and taxpayers alike, the leadership of the Institute will continue to engage with SARS in a constructive manner. However, the public forums such as the conferences and summits hosted by the institute must stand up to technical scrutiny and reflect technical accuracy of the highest regard.
We need to remind ourselves that the issue of transfer pricing in the context of base erosion and profit shifting is not only an African concern, but a global one, receiving high level attention by the group of 20 finance ministers. We cannot be ignorant of the deeper challenges faced by multinationals, tax practitioners and revenue authorities alike.
Neill Wright President, South African Institute of Tax Practitioners