The conference overall was very insightful and I am glad I could participate. I hope to be back next year, and maybe see more of you guys there? As promised herewith the juicy bits from day 2. Just to reiterate, these are not necessarily my views, but I find some of the thoughts interesting so I had to share them:
- Tax authorities, including SARS, use analytical tools to determine a risk rating for taxpayers
- SARS would not only go after specific transactions but also after certain industries, including aggressive schemes/structures (marketing hub was mentioned)
- Initially tax authorities like SARS are just trying to understand your business and taxpayers don’t always provide adequate information. Taxpayers should provide correct and detailed responses, which will help the tax authorities with a ‘better’ audit (correct), less back and forth re information requests, and should an audit go to court the initial information will be under scrutiny
- Taxpayers should keep in mind that tax authorities have no ‘real’ understanding of what is going on and are just trying to get this understanding
- When giving additional information, a taxpayer should reference this back to the TP Document and other info where relevant
- SARS automatically will look at historic tax returns, up to 10 years
- If a taxpayer states there is a TP Document available, SARS will only give 7 days to provide said TP Document
- It isn’t certain that SARS will accept the low value adding services section of the BEPS Action Point 8 – 10
- Should a transaction not be at arm’s length as per s31, could that threaten a CFC’s business establishment exemption?
- If you are using IP, do you know what the actual value of it is? This should form part of the new/overall thresholds re TP Documentation requirements or other BEPS thresholds
- The draft thin cap interpretation note does not seem to be relevant and assumptions are made that it will be revisited before it is finalised
- There is an assumption out there that before BEPS everyone was safe, and no you are no longer – not really true, the arm’s length principle has been around before BEPS
- The fact that a taxpayer is transacting from a tax heaven is not the issue, the issue arises where a taxpayer cannot support a transaction from an arm’s length perspective – would a third party transact that way
- The arm’s length principle is not about being ‘fair’ but rather what is market related – is the market fair?
If you have any thoughts or questions, please share them below. And don’t forget to share the posts so other transfer pricing enthusiast can discover my blog too.