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Country-by-country reporting

4 February 2016

31 countries, including South Africa and its trading partners, have signed the Multilateral Competent Authority Agreement for the automatic exchange of information through country-by-country reporting on 27 January 2016.

This will enable swift and consistent implementation of the new reporting standards for transfer pricing under the base erosion and profit shifting programme.

The OECD Secretary-General Angel Gurría said that “Country-by-country reporting will have an immediate impact in boosting international co-operation on tax issues, by enhancing the transparency of multinational enterprises’ operations”.

With country-by-country reporting tax authorities, in those countries in which multinationals have operations, will get annual up-to-date and complete information relating to the global allocation of income and taxes paid, together with the economic activity of the multinational. The information will stretch as far as providing evidence of the jurisdictions in which entities do business, as well as the business activities in which they engage. The information would be collected by the country of residence (ie South African subsidiary/head office), and will then be exchanged through the exchange of information channels. The first exchange would start in 2017 on 2016 information.

From the above it is clear that all multinationals operating in South Africa should prepare contemporaneous transfer pricing documentation and include their country-by-country report.

Please feel free to contact us should you wish to discuss any of the above.

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