On December 29, 2017, the South African Revenue Service (SARS) published an external guide assisting taxpayers with the completion and submission of country-by-country (CbC) reports. See BEPS Action 13. The guide describes CbC information requirements, as well as how to submit the CbC report, master file, and local file via eFiling.
Each ultimate parent entity (UPE) of an MNE group (total consolidated group revenue of at least R10 billion or €750 million during the immediately preceding fiscal year) that is tax resident in South Africa must file a CbC report with SARS with respect to its reporting fiscal year no later than 12 months after the last day of that year. See the Country-by-Country Reporting Regulations (the “Regulations”). The Regulations are effective for groups’ reporting fiscal years beginning on or after January 1, 2016.
A constituent entity (not the UPE) of an MNE group must file the CbC report with SARS if it is tax resident in South Africa and either (i) the UPE is not required to file a CbC report in its tax jurisdiction; (ii) the UPE’s tax jurisdiction does not have a qualifying competent authority agreement with South Africa by the deadline for filing the CbC report; or (iii) there is a systemic failure in the UPE’s tax jurisdiction. According to the guide, the reporting / constituent entities must also submit a master and local file.
If the aggregate of a resident person’s potentially affected transactions for the year of assessment, without offsetting any potentially affected transactions against one another, exceeds or is reasonably expected to exceed R100 million, then that person must submit a return with a master file and local file.
Once the MNE has determined whether it should submit the CbC report, master file, and local file, or only the master and local files, the entity must complete the CBC01 form and prepare the files for submission. The submission and declaration process of the CbC information can only be done via eFiling.
Once the CBC01 form and/or the master and local files have been submitted, the taxpayer should consider the following to determine whether the information has been submitted successfully:
- The representative will receive an email or SMS indicating that the CbC report was submitted successfully.
- Validations of the submission of the master and local files and the conclusions will be communicated via letter to the representative via eFiling. This letter will be either a rejection letter or an acceptance letter. The representative must respond to a rejection letter by re-submitting the master file and/or local file.
Click here for more information on our BEPS research and technology solutions to address your immediate and ongoing needs.