Transfer pricing and insurance structures in the BEPS Era

Author: Roxanna Nyiri, Director, BDO Tax. Insurance in todays world is no longer limited to a single country and has over the last few decades seen interesting global developments. Reinsurance and cell captive insurance have become an integral part of enterprise risk management. Reinsurance and cell captive insurance not only provide business with tools to manage their risk, limit their cost of insurance, but also to hedge against currency fluctuations. These developments, of course, also have their own unique tax consequences, especially where they span jurisdictional borders. With the advent of the Organisation of Economic Cooperation and Developments (OECDs) Base Erosion and Profit Shifting (BEPS) initiatives, tax authorities across the globe are scrutinising insurance structures from a tax perspective, especially with regard to transfer pricing. This increased scrutiny often leads to the cross border pricing related to intercompany insurance related transactions being challenged.

New double-taxation treaties coming in across Africa

Author: Katrina Mabika is Tax Director: Advisory Services for BDO Zambia. Africas enormous potential as an economic growth hub can be realised by consolidating the regions economic integration and facilitating trade and labour mobility across the continent.   Double taxation treaties are one of the ways to do this, enhancing our continents attractiveness as a trade destination and protecting the interests of African professionals, who often travel across the region for work.

MIRROR MIRROR ON THE WALL WHO HAS THE FAIREST TAX RATE OF THEM ALL?

Author: Roxanna Nyiri, National Head of Transfer Pricing and International Tax and Director BDO and Jolani Proxenos, International Tax & Transfer Pricing Consultant at BDO.   Developing countries (or capital-importing countries) are making strong efforts to attract foreign investments. South Africa and Mauritius are seen as developing countries and have adopted tax incentive regimes to increase their attractiveness for Multinationals to set-up locally.

South Africa signs the Multilateral BEPS Convention

Author: Roxanna Nyiri, National Head of Transfer Pricing and International Tax and Director BDO Johannesburg. The OECDs base erosion and profit shifting (BEPS) has been at the forefront of international tax discussions over the last number of years. Multinationals are concerned with how they will be affected and how tax authorities will be applying BEPS regulations.

Country-by-country reporting: Co-operation is the name of the game

Author: Roxanna Nyiri, Director: Transfer Pricing at BDO Tax Services. The ramping-up of country-by-country (CbC) reporting to regulate transfer pricing and combat cross-border tax evasion, heralds a new global tax landscape. It makes for different demands by tax authorities worldwide and requires the provision of information at a much finer level of detail. As a result, the risks associated with transfer pricing rises significantly and companies need to strategically manage this new policy environment, especially given that the first CbC reports are required to be filed with SARS from 31 December 2017.

SARS publishes draft notice to submit country-by-country, master file and local file returns

Author: Scott Salusbury. On 2 June 2017, the South African Revenue Service (SARS) published a draft public notice requiring the submission of country-by-country (CbC), master file and local file returns. This marks an important step towards the finalisation of South Africas transfer pricing documentation requirements. As a result of the work on the base erosion and profit shifting (BEPS) project, the Organization for Economic Cooperation and Developments Transfer Pricing Guidelines for Multinational Enterprises and Tax Authorities now include recommendations for a three-tiered approach to transfer pricing documentation (ie CbC report, master file and local file), which South Africa is in the process of implementing.

The lawfulness of retrospective amendments in tax law

Author: Beric Croome. On 29 May 2017, Judge Fabricius delivered judgment in the Gauteng High Court in the case of Pienaar Brothers (Pty) Ltd vs Commissioner for the South African Revenue Service and the Minister of Finance, in a case dealing with the Taxation Laws Amendment Act, 2007 (the Amending Act) which inserted section 44(9A) into the Income Tax Act, 1962 (the Act). The taxpayer sought an order declaring that section 34(2) of the Amending Act is inconsistent with the Constitution, and invalid to the extent that it provides that section 44 (9A) of the Act shall be deemed to have come into operation on 21 February 2007 and to be applicable to any reduction or redemption of the share capital or share premium of a resultant in company, including the acquisition by that company of its shares in terms of section 85 of the Companies Act, on or after Read More …

BEPS Action 8 on Hard-to-Value Intangibles: is this the last piece of the puzzle required by SARS to issue its updated Transfer Pricing Practice Note?

Author: Lavina Daya. One of the main action items identified by South Africas National Treasury in its summary of the countrys position on the G20/Organisation for Economic Co-operation and Development (OECD) action plan on base erosion and profit shifting (BEPS), is the requirement for the South African Revenue Service (SARS) to update the Transfer Pricing Practice Note in line with the OECD Transfer Pricing Guidelines to include new guidance on the arms length principle and an agreed approach to ensure appropriate pricing on intangibles that are difficult to value.

Foreign employment income exemption is this the end?

Author: Nandipha Mzizi (Candidate Attorney at Cliffe Dekker Hofmeyr). Currently, s10(1)(o)(ii) of the Income Tax Act, No 58 of 1962 (Act), states that if a South African resident works in a foreign country for more than 183 days a year, with more than 60 of those days being continuous, foreign employment income earned is exempt from tax, subject to certain conditions. This exemption is only available to employees from the private sector. Early this year in the 2017 Budget, it was proposed that the exemption be adjusted as it was excessively generous for those that still benefited from it, ie private sector employees. It was proposed that foreign employment income will only be exempt from tax if it was subject to tax in the foreign country.