Business & Economy

Tuesday, 29 May 2018 15:43

Non-submission of transfer pricing documentation is an incidence of non-compliance

Written by 

By Karen Miller, a Consultant and Carryn Alexander, an Associate at Webber Wentzel

It has long been the position that there are no specific penalties for the non-submission of tax returns and accompanying schedules for corporate taxpayers. Whilst Section 210 and 211 of the Tax Administration Act (TAA) provides for the imposition of penalties, in respect of corporate taxpayers, this would not apply until such time as SARS issues a notice to give effect to this.

The recently issued notice (Notice 480 GG 41621), dated 11 May 2018, specifically relates to the Gazette issued on 20 October 2017 (and extended on 8 December 2017), which required the completion of the Country-by-Country Report (CbC), Master File and a Local File to be prepared by a Reporting Entry, resident in South Africa in terms of Section 25 of the TAA. 

This brings the compliance to the minimum standard for transfer pricing documentation advocated in the OECD recommended measures to tackle Base Erosion and Profit Shifting full circle and finally brings in a statutory non-compliance penalty for failing to complete transfer pricing documentation in South Africa where the thresholds are met.

The impact of non-compliance as required under Section 25 of the TAA will result in the following administrative penalties being imposed in terms of section 210(1), read with section 211 of the TAA:

Amount of Administrative Non-Compliance Penalty


Assessed loss or taxable income for ‘preceding year’



Assessed loss

ZAR 250


ZAR 0 - ZAR 250,000

ZAR 250


ZAR 250,001 - ZAR 500,000

ZAR 500


ZAR 500,001 - ZAR 1,000,000

ZAR 1,000


ZAR 1,000,001 - ZAR 5,000,000

ZAR 2,000


ZAR 5,000,001 - ZAR 10,000,000

ZAR 4,000


ZAR 10,000,001 - ZAR 50,000,000

ZAR 8,000


Above ZAR 50,000,000

ZAR 16,000

It is therefore now essential for resident multi-national entities (MNEs), which are required to file a CbC Report, Master File and/or Local File, to do so no later than 12 months after the last day of the Reporting Fiscal Year of the MNE Group in order to avoid being subject to a fixed amount penalty in terms of section 210(1), read with 211 of the TAA.

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