|ENSafrica, Taxand South Africa|
|Cliffe Dekker Hofmeyr|
|Firms to wach|
As a result of the changing international tax climate, South Africa made a number of amendments to its transfer pricing system this year. Although not a member of the OECD, the country remains a front-runner in applying measures outlined in the BEPS Project.
South Africa has been quick at adopting the OECD recommendations and a number of BEPS points have been implemented. On April 11 2016, the South African Revenue Service (SARS) published draft regulations regarding country-by-country reporting (CbCR) for multinational enterprises. This draft followed the country's signing of the OECD's multilateral competent authority agreement for the exchange of CbC reports in January this year. The regulations are effective for tax years beginning on or after January 1 2016 and the first reports must be filed by December 31 2017.
"The area where we see the most activity is the area of BEPS. South Africa has had significant new rules introduced. We've had transfer pricing for a long time, draft regulations are out now which is going to make documentation compulsory," said Billy Joubert, head of transfer pricing at Deloitte.
On December 15 2015, the SARS issued another draft notice regarding TP documentation setting out additional record-keeping requirements, although it is yet to be finalised. On July 28 2016, the SARS issued draft public notice asking for comments on TP documentation to be submitted by August 19.
As in many other jurisdictions around the world, TP professionals have been busy as taxpayers are asking more questions and are more aware of their structures. "BEPS is a very big topic in South Africa and globally, and we are very aware of what is going on and are close to the ongoing BEPS discussions," said Joubert.
Reassuring taxpayers that their structures are BEPS compliant has been a service in high demand this year, while advisers also saw a growing demand for dispute advice as the authorities increased the amount of audits they were conducting, with a clear agenda to try and collect funds.
"South African multinationals are very much trying to get to grips now with what this [BEPS] actually means for them," said Anne Bennett, head of tax and transfer pricing at Webber Wentzel.
SARS has been busy adapting to the regulation changes and radically enhanced the size of its internal transfer pricing team. Despite some departures of senior people to the private sector recently, SARS have said it intends to keep growing the team, advisers reported.
South African Revenue Service
Visiting address: Lehae La Sars, 299 Bronkhorst Street, Nieuw Muckleneuk, 0181 Pretoria
Postal address: Private Bag X923, Pretoria 0001
Tel: +27 12 422 4000
(As of January 1 2016)
|Corporate income tax||28% (a)|
|Capital gains tax rate||18.648%|
|Branch tax rates||28% (a)|
|Royalties from patents, know-how, etc||15% (d)|
|Branch remittance tax||n.a.|
Net operating losses (years)
Source: EY 2016 Worldwide Corporate Tax Guide