The cat is finally out of the bag. SARS released a public draft notice that requires taxpayers to file their transfer pricing master file and local file with the tax return. The threshold is set at R100mil of total aggregate cross border related party transactions. This is lower than thresholds introduced in Europe but in line with the previous documentation retention requirements, which came into effect 1 October 2016. As always make sure you consider all thresholds throughout the countries you operate in, to make sure you are compliant around the world (same is true for CBCR).
Interestingly though, the submission of the master file and local file are applicable for financial years starting on or after 1 January 2016. This in my mind is retrospective, even if SARS may argue that we all knew this was going to happen, I think it would be more appropriate to introduce this going forward. Owing to the fact that tax returns are due 12 months after financial year-end, the first master file and local file have to be submitted by 31 December 2017.
Comments to the draft are due on 22 June. I will provide my comments either through SAICA or Grant Thorton, if you have any comments but don’t feel like sending them to SARS directly, feel free to send them to me and I will add them to my submission. If you would like to read more about the draft notice, click here or go straight to the actual draft notice here.
In other news, Djibouti and Thailand joined the Inclusive Framework making the total 98. Find the relevant OECD updates here (for Djibouti) and here (for Thailand). And more transfer pricing news below.
“There are a billion reasons why Chevron’s tax dispute with the Australian Taxation Office is important enough to be allowed a last-chance appeal, the company told the High Court of Australia.
Chevron’s application for special leave to appeal to the high court, filed May 19, said the ATO described earlier rulings on the matter as having “direct implications” for a number of cases it is pursuing.
The company’s application notes that according to the ATO, these cases are potentially worth “A$1 billion a year.””
On top of the A$1 billion exposure, I would have mentioned that it is likely that another court may rule differently considering transfer pricing is not a science but rather an art.
“The Botswana Unified Revenue Service (BURS) says tax avoidance schemes such as transfer pricing, base erosion and profit shifting appear to be on the rise in the country…
Some taxation experts said Botswana faces the risk of losing out on tax revenue from cross-border transactions carried out by multinational enterprises if a transfer pricing legislation is not put in place soon.
In view of this, the government is understood to be considering proposals from the Taxation Review Committee that include the introduction of transfer pricing rules to address tax avoidance and to align Botswanaís tax system with international best practice.”
Looks like another African country may be signing up for transfer pricing legislation. Countries like Zimbabwe have just introduced transfer pricing legislation. In my mind, the more the better, as long as they follow the OECD Guidelines or UN TP Model.