On 14 October 2022, the South African Revenue Service (SARS) published a draft interpretation note on the definition of “associated enterprise” for public comment. This draft note provides guidance on the interpretation and application of the definition of “associated enterprise” in section 31(1) of the Income Tax Act (ITA). Section 31 contains rules aimed at preventing a reduction in the South African tax base as a result of the mispricing or incorrect characterization of specified transactions, operations, schemes, agreements, or understandings.
The inclusion of an “associated enterprise” in section 31 will come into operation on 1 January 2023 and will apply in respect of years of assessment commencing on or after that date.
Comments on this note may be emailed to policycomments@sars.gov.za by 13 January 2023.
