1) For the purposes of this section, ‘financial assistance’ includes the provision of any—
a) loan, advance or debt; or
b) security or guarantee.
2) Where—
a) any transaction, operation, scheme, agreement or understanding has been directly or indirectly entered into or effected between or for the benefit of either or both—
i)
aa) a person that is a resident; and
bb) any other person that is not a resident;
ii)
aa) a person that is not a resident; and
bb) any other person that is not a resident that has a permanent establishment in the Republic to which the transaction, operation, scheme, agreement or understanding relates;
iii)
aa) a person that is a resident; and
bb) any other person that is a resident that has a permanent establishment outside the Republic to which the transaction, operation, scheme, agreement or understanding relates,
and those persons are connected persons in relation to one another; and
b) any term or condition of that transaction, operation, scheme, agreement or understanding—
i) is different from any term or condition that would have existed had those persons been independent persons dealing at arm’s length; and
ii) results or will result in any tax benefit being derived by any person that is a party to that transaction, operation, scheme, agreement or understanding,
the taxable income of each person that is a party to that transaction, operation, scheme, agreement or understanding that derives the tax benefit must be calculated as if that transaction, operation, scheme, agreement or understanding had been entered into on the terms and conditions that would have existed had those persons been independent persons dealing at arm’s length.
3) For the purposes of subsection (2), where any transaction, operation, scheme, agreement or understanding has been directly or indirectly entered into or effected as contemplated in that subsection in respect of—
a) the granting of any financial assistance; or
b) intellectual property as contemplated in the definition of ‘intellectual property’ in section 23I(1) or knowledge,
‘connected person’ means a connected person as defined in section 1: Provided that the expression ‘and no shareholder holds the majority voting rights in the company’ in paragraph (d)(v) of that definition must be disregarded.
4) Where any transaction, operation, scheme, agreement or understanding has been entered into between a headquarter company and—
a) any other person that is not a resident and that transaction, operation, scheme, agreement or understanding is in respect of the granting of financial assistance by that other person to that headquarter company, this section does not apply to so much of that financial assistance that is directly applied as financial assistance to any foreign company in which the headquarter company directly or indirectly (whether alone or together with any other company forming part of the same group of companies as that headquarter company) holds at least 20 per cent of the equity shares and voting rights; or
b) any foreign company in which the headquarter company directly or indirectly (whether alone or together with any other company forming part of the same group of companies as that headquarter company) holds at least 20 per cent of the equity shares and voting rights and that transaction, operation, scheme, agreement or understanding comprises the granting of financial assistance by that headquarter company to that foreign company, this section does not apply to that financial assistance.