Author: Roxanna Nyiri, Head: Transfer Pricing, BDO South Africa The OECD’s adoption of country-by-country reporting (CbCR) was issued in September 2014 as part of the ongoing review of base erosion and profit shifting (“BEPS”).
Category: OECD – BEPS Project
CFC rules to be amended in the battle against BEPS
A controlled foreign company (CFC) is any foreign company of which more than 50% of the total participation rights are directly or indirectly held, or of which more than 50% of the voting rights are directly or indirectly exercisable, by one or more South African residents.
Transfer pricing documentation requirements due to change
The Davis Committee has made certain recommendations relating to transfer pricing and documentation in its report on the OECD’s Base Erosion and Profit Shifting (BEPS) Action Plan. We are aware that the current transfer pricing practical guidelines, as contained in SARS’ Practice Note 7 (PN7), are not that clear and are based on outdated publications. The Davis Committee confirms that PN7 should be updated and revised to reflect recent developments. At least one legally Binding General Ruling should be enacted on section 31 of the Income Tax Act.
Base erosion and profit shifting – a South African perspective
Author: Peter Dachs – ENSafrica The concept of base erosion and profit shifting (BEPS) has been debated at various international forums following discussions at the G20 Finance Ministers and Central Bank Governors meeting and the G20 Heads of State summit in Russia last year. The Organisation for Economic Co-operation and Development’s (OECD) BEPS Action Plan provides for 15 actions to be completed in three phases by December 2015.
Base Erosion and Profit Shifting (“BEPS”) – are you BEPS proof?
Author: Okkie Kellerman – ENSafrica BEPS is a term used by the Organisation for Economic Co-operation and Development (“OECD”) to describe tax planning strategies exploiting gaps and mismatches in tax rules so that profits disappear for tax purposes or profits are shifted to locations with little or no real activity and where profits are subject to little or no taxes. Although BEPS is not illegal it distorts competition between those companies operating cross border and those operating domestically and it leads to inefficient allocation of resources and it seems unfair that some companies can legally avoid paying tax.
OECD proposes curtailing use of commissionaire and other arrangements that aim to avoid PE Status
The OECD Focus Group on the Artificial Avoidance of Permanent Establishment (PE) Status recently issued its Proposed Discussion Draft that proposes 14 possible changes to the definition of a PE under Article 5 of the OECD Model Tax Convention. The proposals were a response to the OECD Action Plan on Base Erosion and Profit Sharing (BEPS) published in July 2013. The primary focus is on the perceived abuses associated with: (i) using a “commissionaire arrangement” instead of a local distributor arrangement in order to shift profits out of the country where sales take place; (ii) using certain specific activity exemptions to prevent the application of the PE rules; and (iii) certain uses of construction and insurance contract provisions.
BEPS tail shouldn’t wag global investment dog
Author: Claire M.C. Kennedy of Bennett Jones LLP I spoke recently on a panel in Tokyo on the future of international tax planning after BEPS (the OECD’s & G20’s Action Plan to counter Base Erosion & Profit Shifting). The panel also featured a senior official at the OECD and practitioners from the US, Japan, Germany, France, Ireland and the Netherlands It was refreshing to hear the OECD official acknowledge that the international corporate tax planning targeted by BEPS constitutes legal arrangements and transactions and not illegal tax evasion.
The thin capitalisation provisions of section 23M and further amendments proposed thereto
Author: Okkie Kellerman and Esther Geldenhuys – ENSafrica In line with recent pronouncements by the OECD relating to so-called Base Erosion and Profit Shifting Project (BEPS), section 23M was introduced by the Taxation Laws Amendment Act, 31 of 2013. Section 23M of the Income Tax Act, 58 of 1962 (“the Act”) will come into effect on 1 January 2015 and has a similar purpose to the thin capitalisation provisions of section 31 of the Act. The Taxation Laws Amendment Bill, 13 of 2014, as tabled in parliament, contains a number of substantial amendments to the current provisions of section 23M. A summary of the provisions of section 23M following these amendments is set out below.
Base erosion and profit shifting (“BEPS”) – Are you BEPS proof?
Author: Okkie Kellerman – Tax Executive at ENSafrica BEPS is a term used by the Organisation for Economic Co-operation and Development (“OECD”) to describe tax planning strategies exploiting gaps and mismatches in tax rules so that profits disappear for tax purposes or profits are shifted to locations with little or no real activity and where profits are subject to little or no taxes. Although BEPS is not illegal it distorts competition between those companies operating cross border and those operating domestically and it leads to inefficient allocation of resources and it seems unfair that some companies can legally avoid paying tax.
Base erosion and profit shifting – treaty shopping
Author:Peter Dachs – Tax Director at ENSafrica The concept of base erosion and profit shifting (“BEPS”) has been much discussed at various international forums including the G20 Finance Ministers and Central Bank Governors meeting in July 2013 in Moscow as well as the G20 Heads of State meeting in September 2013. From a South African perspective, the Davis Tax Committee has been set up, inter alia, in order to address the issue of BEPS in a South African context.