Research On Tax Risks Of Company A’s Undertaking Automotive Manufacturing Technical Services In South Africa

In 2021,the African Continental Free Trade Area was officially launched,and China-South Africa bilateral economic and trade cooperation and tax co-governance will meet new growth opportunities.As the country with the strongest comprehensive strength in Africa,South Africa’s manufacturing industry has developed rapidly,while the producer service industry has developed slowly.The technical service of automobile manufacturing industry belongs to the R&D design and other technical services in the producer service industry,and develops with the development of the producer service industry.But,when Chinese enterprises go to South Africa to engage in producer service,there are still many disputes in tax laws and bilateral tax treaties,which means that Businesses related to the producer service industry will face the risk of higher tax burdens and tax disputes.Moreover,the existing research on the tax risk of Chinese "Going Global" enterprises investing in South Africa mainly focuses on the manufacturing industry,and most of them focus on the macro level,and there is a lack of research on the producer services,which derived from the manufacturing industry,based on the micro perspective.Therefore,based on previous research,and according to China’s national conditions and drawing on international experience,this paper starts from the research perspective at the micro level,and studies the tax policy of engaging in producer services in automobile manufacturing enterprises.It focuses on the analysis of the tax risks at the enterprise structure level,transaction level and tax supervision level,when "Going Global" enterprises invest in South Africa.At the same time,Company A,as an early group of "Going Global" enterprises,chose South Africa when entering the African market,and is actively responding to the call to promote the development of the producer service industry.Therefore,this paper takes the case of Company A as the core,studies the tax risks involved in the technical services of automobile manufacturing in the provision of productive services in South Africa,and puts forward effective suggestions for the tax risks that Company A may face,and then,it also puts forward corresponding specific preventive measures for "Going Global" enterprises to conduct investment and trade activities in South Africa.Through case and data analysis,this paper draws the following conclusions.Enterprises investing in automotive manufacturing technology services in South Africa should avoid becoming a permanent establishment,but should make them attributable to royalties through reasonable business arrangements,thereby greatly reducing their tax burden..At the same time,this paper also proposes general risk prevention suggestions:(1)At the enterprise structure level,a special tax department should be set up to conduct on-site inspections and professional intermediaries should be hired to conduct due diligence.(2)At the transaction level,it should avoid becoming a place-based permanent establishment or a service-based permanent establishment,in order to classify technical service income as royalties and minimize tax costs.(3)At the supervision level,attention should be paid to the tax environment and the latest policies in South Africa to estimate tax-related risks in advance,and should fully communicate and exchange with South African tax authorities to resolve tax disputes.Meanwhile,it should seek Chinese tax authorities and overseas institutions actively,to Get directional guidance and help China and South Africa supplement and refine the corresponding tax regulations.