viernes, 26 de agosto de 2016

South Africa Requests Comments on Transfer Pricing Documentation

On July 28, 2016, the South African Revenue Service (SARS) issued a draft public notice asking for comments on transfer pricing documentation requirements (see BEPS Action 13) under Section 29 of the Tax Administration Act No. 28 of 2011. Comments must be submitted by August 19, 2016. The notice applies to years of assessment commencing on or after July 1, 2016.

If a person has entered into a “potentially affected transaction” and the aggregate of the person’s potentially affected transactions for the year of assessment exceeds or is reasonably expected to exceed the higher of 5 percent of the person’s gross income or R50 million, then the following is required (list is not exhaustive):

  • A description of the person’s ownership structure.
  • The name, address of the principal office, legal form and jurisdiction of tax residence of each of the connected persons.
  • The person's business operation summary, including a description of business restructurings or transfers of intangibles, key value drivers, and industry incentives affecting the business.

In addition to the above, a person must keep the following records in respect of any potentially affected transaction that exceeds or is reasonably expected to exceed R1 million in value (list is not exhaustive):

  • The nature and terms entered into by the person with each connected person.
  • Copies of any contracts or agreements entered into with each connected person, if such contracts or agreements were prepared in the ordinary course of business.
  • A description of the functions performed, risks assumed and assets employed by the person and the connected persons.
  • A description of the intangible assets and their influence on the functional and risk classification of the tested party.
  • Operational flows including information flow, product flow, and cash flow.
  • Where a tested party is tax resident outside the Republic, documents that depict the functional and risk classification of the tested party, including a description of the business, contracts between the tested party and its customers and suppliers, and commercial invoices between the tested party and its customers and suppliers.

Source: Reuters

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