Transfer pricing and intangibles

The area of intangibles in the context of transfer pricing has long been regarded as one of the major battlefields by tax authorities and multinational enterprises worldwide.

The topic has also given rise to some of the most prominent international court cases on transfer pricing, such as the GlaxoSmithKline case in the US, which, with a purported settlement amount of US$4 billion, is widely regarded as the largest transfer pricing case ever settled.

From a South African perspective, transfer pricing in the context of intangibles has long been a hot topic. This is particularly due to the additional complexity caused by the South African Reserve Bank’s policy of not allowing the transfer of intangible property developed in South Africa to any non-South African related party.