Executive summary

On 29 December 2017, the South African Revenue Service (SARS) released an updated list of jurisdictions with which South Africa does not have a Qualifying Competent Authority Agreement (QCAA) in effect by the time the Country-by-Country (CbC) report must be filed (note that first filings are due 28 February 2018).

This means that South African taxpayers forming part of a foreign Multinational Enterprise (MNE) group may be required to file a CbC report with SARS, even though the Ultimate Parent Entity (UPE) is resident in a country other than South Africa, for example the United Arab Emirates or China.

Detailed discussion

In terms of Article 2(2) of the regulations specifying the changes to the CbC Reporting Standard for MNEs, published in Government Gazette No. 40516 of 23 December 2016 (CbC regulations), a member of an MNE Group resident in South Africa that is not the UPE of that MNE Group may be required to file a CbC report with SARS under the three sets of circumstances outlined below.

• Absence of an obligation for the UPE of an MNE group to file a CbC report in its jurisdiction of tax residence.
• Cases where the jurisdiction in which the UPE of the MNE Group is tax resident has an International Agreement in place with South Africa but does not have a QCAA in effect by the time the CbC report must be filed (the focus of this Alert).
• Cases where there has been a systemic failure of the jurisdiction in which the UPE of the MNE group is tax resident. SARS was not aware of any such failures at the time of publication.

The list of jurisdictions as of 29 December 2017 with which South Africa has an International Agreement but no QCAA in place are:

Taxpayers should thus ensure that they are aware of their CbC reporting requirements and timelines in South Africa since it may extend beyond filing a Local File.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Advisory Services (Pty) Ltd, Cape Town

• Ide Louw
  ide.louw@za.ey.com
• Craig Mitchell
  craig.mitchell@za.ey.com

Ernst & Young Advisory Services (Pty) Ltd, Johannesburg

• Justin Liebenberg
  justin.liebenberg@za.ey.com
• Michiel Els
  michiel.c.els@za.ey.com
• Marius Leivestad
  marius.leivestad@za.ey.com

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

• Rendani Neluvhalani
  rendani.mabel.neluvhalani@uk.ey.com
• Byron Thomas
  bthomas4@uk.ey.com

Ernst & Young LLP, Pan African Tax Desk, New York

• Silke Mattern
  silke.mattern@ey.com
• Dele A. Olaogun
  dele.olaogun@ey.com
• Jacob Shipalane
  jacob.shipalane1@ey.com

Ernst & Young LLP, Pan African Tax Desk, Houston

• Elvis Ngwa
  elvis.ngwa@ey.com

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ATTACHMENT

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