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14 Oct 2018

On 11 May 2018, the South African Revenue Service (“SARS”) published, by Government Gazette; “Incidences of non-compliance by a person in terms of Section 210(2) of the Tax Administration Act, 2011 (Act no. 28 of 2011) that are subject to a fixed amount penalty in accordance with Sections 210(1) and 211 of the Act.”

The notice enacted the administrative non-compliance penalty table to be imposed for failure to submit a Country-by-Country Report (“CbCR”), a master file (“MF”) or local file (“LF”) by certain persons within 12 months from (i) the last day of the Reporting Fiscal Year or (ii) the date on which the person’s financial year ends, depending on the type of entity. For further details on the entities that are required to submit the specified returns, refer to the public notice which was published by SARS on 20 October 2017.

The penalty amount is based on the assessed loss or taxable income (including various other circumstances), for the ‘preceding year’ and ranges from R250 to R16,000 per month.

The CbCR, MF and LF should be submitted via the CBC functionality on eFiling. The CbCR is referred to as the CBC01 form, the MF and LF on the other hand are uploaded as supporting documents. A comprehensive guide on how to complete and submit your Country by Country information is available on the SARS website.

Another important aspect to remember is that any entity that is a member of a multinational enterprise (“MNE”) and is a South African resident for tax purposes must notify SARS if it is the Ultimate Parent Entity (“UPE”). If the entity is not the UPE it must notify SARS of the identity and tax residence of the Reporting Entity. The notification requirement is applicable for Reporting Fiscal Years commencing on or after 1 January 2016 and is due within 12 months of the year end.    

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