On 23 June 2017, the South African Revenue Service (SARS) released an external Business Requirements Specification (BRS) document concerning Country-by-Country and Financial Data reporting. The document contains the draft public notice requiring the submission of CbCR, Master File and Local File.
According to external Business Requirements Specification (BRS), the master file should include the nature of its global business operations, its overall transfer pricing policies, and its global allocation of income and economic activity, in order to assist tax administrations to evaluate any significant transfer pricing risk. The master file is generally compiled by a parent or headquartered Entity but is available to and may be obtained from all Entities of an MNE. In general, the master file is intended to provide a high-level overview, in order to place the MNE’s transfer pricing practices in their global economic, legal, financial and tax context.
Local file must be compiled and kept by all MNE Entities and will provide more detailed information relating to specific intercompany transactions. The information required in the local file supplements the master file and helps to meet the objective of assuring that an Entity of the MNE has complied with the arm’s length principle in its material transfer pricing positions affecting a specific jurisdiction. The local file focuses on information relevant to the transfer pricing analysis related to transactions taking place between a local country affiliate and associated enterprises in different countries and which is material in the context of the local country’s tax system.
For the CbC Report, the Reporting Entity is required to complete the CbC01 Form and before the user can complete the submission process, the user will be required to formally declare that the information captured on the CbC01 form is true and correct. The format of the form will be an Adobe form developed by SARS. The form will contain all the defined fields to compliment the CbC Report required as per the CbC XML Schema.
