SA finalised specific regulations for CbC reporting

The final South African regulations for country-by-country (CbC) reporting were gazetted on 23 December 2016. With the release of the final regulations, South African multinational group companies are now obliged to report certain information in line with the Base Erosion and Profit Shifting (BEPS) project, directed by the Organization for Economic Co-operation and Development (OECD).

The final regulations have not changed from the previous draft and are in line with the OECD BEPS Action 13. The first reporting period is to commence for fiscal years starting on or after 1 January 2016 (reporting fiscal year). This means that the first CbC reports will be required to be filed with SARS from 31 December 2017.

South African taxpayers that are not the reporting entity (which is generally the top company that has an obligation to submit a CbC report in a multinational group) are referred to as a constituent entity and will have to notify SARS of the reporting entity 12 months after the last day of the reporting fiscal year.

The consolidated group revenue threshold (which is either R10 billion for South African held group companies or 750 million Euro for foreign group companies) which require certain taxpayers to submit a CbC report or notify SARS have not changed.

If you have any questions, please let me know below or contact me.

Weekly transfer pricing roundup – 12 December

This week McDonald’s made a bold move by restructuring its operations amid a proby by the EU competition authority, India and the USA signed their first APA, and the OECD provided some more guidance on CBCr. See the articles below, happy reading.

McDonald’s to Move Non-U.S. Tax Base to the U.K. (The Wall Street Journal)

“McDonald’s Corp. on Thursday said a large portion of its non-U.S. income would be taxed in the U.K. following a restructuring that shifts operations away from Luxembourg amid a probe by the European Union competition authority over its tax arrangements.

McDonald’s said it had created a U.K.-based international holding company that would have “responsibility for the majority of royalties received from licensing the company’s global intellectual property rights outside the United States.” It added in a statement that the profits of the new international holding company would be subject to U.K. corporation tax.

The Luxembourg office will retain responsibility for restaurants in the country, but other functions will transfer to the U.K holding company, McDonald’s said.

The move comes as the European Commission, the EU’s executive arm, investigates the company’s tax affairs in Luxembourg. The commission, which opened the probe last December, alleges that a deal Luxembourg granted the fast-food chain in 2009 may have illegally reduced its tax burden and breached competition rules.

Brussels could order the fast food giant to pay back as much as €1.5 billion ($1.6 billion) in unpaid taxes between 2009 and 2015 to Luxembourg, according to an October statement by U.S. and European trade unions, which based its information largely on the company’s public financial statements.

McDonald’s says it received no special treatment and paid all taxes it owes. On Thursday, the company said it paid more than $2.5 billion in corporate taxes in the EU between 2011 and 2015…”

India, US strike 1st bilateral advance pricing agreement: Government (The Economic Times)

“India and the US have reached a deal for the first bilateral advance pricing agreement, a move that will enable American firms to ascertain tax liabilities beforehand, Finance Minister Arun Jaitley said today…”

OECD Releases Updated Guidance on Implementation of Country-by-Country Reporting (Thomson Reuters)

“On December 5, 2016, the OECD released updated guidance on  the implementation of country-by-country (CbC) reporting under BEPS Action 13. The OECD also released a database containing information on CbC reporting implementation by various countries to date.

The December 5th guidance updates the Q&A guidance issued by the OECD on June 29, 2016 and October 12, 2016, which address the following CbC reporting issues:

  • Transitional filing options for multinational enterprises (MNEs) (“parent surrogate filing”).
  • The application of CbC reporting to investment funds.
  • The application of CbC reporting to partnerships.
  • The impact of currency fluctuations on the agreed €750 million CbC reporting filing threshold…”

South Africa releases specific draft regulations for country-by-country tax reporting

puzzle-696725_960_720I have recently joined Grant Thornton’s transfer pricing team and was given the opportunity to write transfer pricing alerts for Grant Thornton. Going forward, I will be publishing my posts via the Grant Thornton database but I will also post the same articles here with the hope to get more interaction.

My first post dealt with secondary adjustment and can be found here. I will not go into any further detail as this was previously discussed, but if you would like to pick up on any points please feel free to comment below.

My second post which deals with country-by-country reporting in South Africa can be found here.  What are your thoughts on the topic? Again I would love to hear your comments so please don’t be shy and post below.