On May 21, 2018 the South African Revenue Service (SARS) released a Draft Guide on Mutual Agreement Procedures for comments. Interested parties have until June 15, 2018 to submit comments on the draft guide.
The draft guide discusses a.o. the following topics:
· Background
o What is a mutual agreement procedure?
o Legal basis for mutual agreement procedure
o Multilateral Instrument
o The role of a competent authority
o South Africa mutual agreement procedure profile and website
· In what instances would mutual agreement procedure apply?
o Taxation not in accordance with the Convention
§ Dual residence
(a) Place of effective management
(b) Mutual agreement
§ Withholding taxes withheld not in accordance with the relevant double taxation agreement
§ Transfer pricing mutual agreement procedure cases
o Difficulties or doubts arising as to the interpretation or application of the Convention
· Circumstances in which a mutual agreement procedure request may be accepted or denied
o No action by one or both of the jurisdictions results or will result in taxation not accordance with the Convention
o Time limits for requesting a mutual agreement procedure
§ Time limitation in double taxation agreements
§ Domestic tax law (prescription – three-year period)
§ Extension of time under prescription
o Objection, alternative dispute resolutions and audit settlements
o Right to access the mutual agreement procedure when domestic or treaty-based antiabuse rules have been applied
· Making a mutual agreement procedure request
o General mutual agreement procedure process
o Format of a mutual agreement procedure request
o Minimum information requirements
o Mutual agreement procedure request for multiple tax years and recurring issues
o Checklist before submitting a mutual agreement procedure request
o How to submit a mutual agreement procedure request
o Withdrawal of a mutual agreement procedure request
o Use of information within a mutual agreement procedure process
· Concluding a mutual agreement procedure request
o Objections not considered to be justified
o Notifying the taxpayer
o Providing relief
o Secondary adjustments, withholding tax and repatriation on transfer pricing adjustments
o Penalties and interest
· Interaction with domestic law
o Suspension of payment pending mutual agreement procedure outcome
o Mutual agreement procedure and assistance in collection of taxes
· Miscellaneous issues
o Advance pricing arrangement programmes
o Issues related to self-initiated foreign adjustments
o Protective mutual agreement procedure filing
o South Africa’s position on mutual agreement procedure arbitration
o Pension and annuities (RST01 and RST02 application forms)
o Multilateral mutual agreement procedures
Click here to be forwarded to the Draft Guide on Mutual Agreement Procedures as released for comments by SARS on May 21, 2018.
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