Extended Background

IP-rich sectors in South Africa have long relied on affiliate royalty arrangements, but local courts increasingly scrutinized the basis and benchmarking of such charges. This case featured a taxpayer defending arm’s-length royalty rates using deep market research amid revenue challenges based on rough averages.

Detailed Arguments

Taxpayer

• Supplied direct benchmarks from global royalty databases and contract samples.

Revenue

• Relied on averages and sectoral “rough justice” in the absence of deep comparability testing.

Court Reasoning

• Backed the taxpayer, dismissing low-quality comparables and demanding robust, like-for-like market benchmarks.

Procedural Journey

• Typical audit/adjustment-judicial review escalation, ending with a win for the taxpayer.

Implications Beyond the Case

• Across Africa, genuine benchmarking is now the standard—broad averages are out.

Original Case Reference:

Seek South African Supreme Court records or reputable commercial/academic commentaries for specifics.