Earlier this year SARS released the final regulations for CbC reporting (read our previous e-taxline and insights article on this topic here), which requires South African multinational companies to report certain information in line with the Base Erosion and Profit Shifting (BEPS) project, directed by the Organisation for Economic Co-operation and Development (OECD).
The aim of the BEPS project is to eliminate tax planning strategies which exploit gaps and mismatches in tax rules to artificially shift profits to low- or no-tax locations.
Companies that are required to submit CbC reports are the ultimate parent entity of a multinational group with consolidated revenue in excess of R10 billion or €750 million for foreign-held companies. If this reporting entity is a South African tax resident, it would need to electronically submit a CbC01 form found on the SARS website, by using the SARS eFiling platform.
The SARS’ recently published communication on the submission of relevant returns gives some initial guidance to companies. South African entities who are not the ultimate parent are referred to as constituent entities and need to notify SARS of the reporting entity within 12 months after the last day of the reporting fiscal year.
These notifications of who the reporting entity is should be sent to SARS via e-mail to Bus_Sys_CDSupport@sars.gov.za, until such time that SARS specifies a different process. As there is no form for these notifications, nor guidance from SARS regarding the information to be included in the notification, Grant Thornton’s Tax team advises that constituent companies would have to apply a degree of judgment in the interim.
The first reports and notifications are to be filed with SARS by 31 December 2017. SARS requires the reports or notifications within 12 months after the last day of the reporting fiscal period, effective for fiscal years starting on or after 1 January 2016.
The South African regulations for CbC reporting are in line with the BEPS Action 13 and global best practice. This is ultimately a positive development for the local and global tax system, as it advances transparency and sustainability in financial reporting.
For further information or for assistance either in understanding how these reporting requirements affect you, or how to submit the actual reporting or notifications, please contact our Transfer Pricing experts.