Related Party Transactions
Transactions between related parties should be conducted on an arm’s length basis. If this was not the case, then the tax commissioner has the right to adjust the taxable profits of the seller/provider and thus tax the difference. The law did not provide for corresponding compensating adjustment in the hands of the buyer.
This anomaly is now corrected and if the tax authorities make an adjustment increasing the taxable profit of one entity, a corresponding adjustment decreasing taxable profit of other entity should be made.
The law is amended with a retrospective effect as of 1 January 2015.
On 10th of December 2015, the House of Representatives voted a number of significant tax law amendments that were published in the Government Gazette on 17 December 2015.