CATEGORIES
- (1) Negotiating Tax Debt and Payment Arrangements with SARS
- (34)Accounting
- (1)Accounting for Income Tax
- (2)Accounting for Income Tax
- (8)Administration of Estates
- (1)Advisory Services
- (1)Application of tax rates, s6(2) rebates
- (1)Assessed losses
- (4)Audit, Reviews & Other Services
- (9)Blogs
- (8)Capital Gains Tax
- (1)Capital Gains Tax - Individuals Tax
- (1)Capital Gains Tax Implications of Trusts
- (2)Case study: Home office expense
- (1)Case study: Travel allowances
- (1)Company Formations
- (1)Compliance
- (123)Corporate Tax
- (9)Customs and Excise
- (2)Deceased Estate
- (1)Deductions Pre-trade and prepaid expenses
- (1)Deregistration
- (2)Employer and Employee (PAYE and UIF Specific)
- (1)Estate Duty
- (1)Events / Webinars
- (10)Faculty News
- (2)Farming
- (152)Individuals Tax
- (1)Input - Customs Duty
- (3)Interest
- (13)International Tax
- (17)Legislation
- (1)Low interest rate loans and loan subsidies
- (1)Nature of the rights of beneficiaries
- (1)Notional input tax
- (9)Payroll
- (2)Practical Payroll
- (2)Provisional tax (Link with other Taxes)
- (2)SARS Dispute Resolution
- (4)SARS Issues
- (1)Salaried Employees
- (135)Tax Administration
- (2)Tax Administration Part 2B: Resolving Problems with SARS using the Tax Ombud
- (1)Tax Administration Part 3B Dispute Resolution - Objection and appeal
- (3)Tax Update
- (1)Tax implications of loans to trusts
- (1)Tax residence
- (1)Tax returns and payments
- (2)Transfer-Pricing
- (1)Trust Income / Gain Allocations
- (1)Trust types and income allocations
- (6)Trusts
- (72)VAT
- (3)VAT periods
- (1)Wear and tear allowances
- (1)Wills, Estates & Trusts
- (1)Zero Rated
- (1)eFiling
- Show All
Non-submission of transfer pricing documentation is an incidence of non-compliance
- 28 May 2018
- Corporate Tax
- Karen Miller & Carryn Alexander
Important:
This article is based on tax law for the tax year ending 28 February 2019.
Authors: Karen Miller & Carryn Alexander
It has long been the position that there are no specific penalties for the non-submission of tax returns and accompanying schedules for corporate taxpayers. Whilst Section 210 and 211 of the Tax Administration Act (TAA) provides for the imposition of penalties, in respect of corporate taxpayers, this would not apply until such time as SARS issues a notice to give effect to this.
The recently issued notice (Notice 480 GG 41621) dated 11 May 2018, specifically relates to the Gazette issued on 20 October 2017 (and extended on 8 December 2017), which required the completion of the Country-by-Country Report (CbC), Master File and a Local File to be prepared by a Reporting Entry, resident in South Africa in terms of Section 25 of the TAA.
This brings the compliance to the minimum standard for transfer pricing documentation advocated in the OECD recommended measures to tackle Base Erosion and Profit Shifting full circle and finally brings in a statutory non-compliance penalty for failing to complete transfer pricing documentation in South Africa where the thresholds are met.
The impact of non-compliance as required under Section 25 of the TAA will result in the following administrative penalties being imposed in terms of section 210(1), read with section 211 of the TAA:
Amount of Administrative Non-Compliance Penalty
|
Item |
Assessed loss or taxable income for ‘preceding year’ |
Penalty |
|
(i) |
Assessed loss |
ZAR 250 |
|
(ii) |
ZAR 0 - ZAR 250,000 |
ZAR 250 |
|
(iii) |
ZAR 250,001 - ZAR 500,000 |
ZAR 500 |
|
(iv) |
ZAR 500,001 - ZAR 1,000,000 |
ZAR 1,000 |
|
(v) |
ZAR 1,000,001 - ZAR 5,000,000 |
ZAR 2,000 |
|
(vi) |
ZAR 5,000,001 - ZAR 10,000,000 |
ZAR 4,000 |
|
(vii) |
ZAR 10,000,001 - ZAR 50,000,000 |
ZAR 8,000 |
|
(viii) |
Above ZAR 50,000,000 |
ZAR 16,000 |
It is therefore now essential for resident multi-national entities (MNEs), which are required to file a CbC Report, Master File and/or Local File, to do so no later than 12 months after the last day of the Reporting Fiscal Year of the MNE Group in order to avoid being subject to a fixed amount penalty in terms of section 210(1), read with 211 of the TAA.
This article first appeared on webberwentzel.com.