An evaluation of the Country-by-Country Reporting (CbC Template) for transfer pricing documentation purposes from a South African perspective

Master Thesis


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University of Cape Town

In February 2013, the OECD published a report on its findings concerning base erosion and profit shifting ("BEPS").1 That report, in particular Action Plan 13, dealt with the re-examination of transfer pricing documentation wherein the shifting of profits to lower tax rate jurisdictions is addressed. The OECD proposed a Country-by-Country ("CbC") methodology whereby certain information is required to be disclosed within a Country-by-Country Reporting Template ("the CbC Template"). The main purpose of the CbC Template is to assist tax administrations to identify risks related to base erosion and profit shifting; also, and where applicable, data collected via the CbC Template can be used for economic and statistical analysis. The OECD is of the view that the CbC Template in assisting tax administrators to determine transfer pricing risk, will serve as a high-level risk assessment indicator for transfer pricing. Accordingly, the main aim of the CbC Template is to be a tool for tax administrators to identify and consequently ensure that the revenue of a country is not eroded unfairly. The objective of this paper is to review the CbC Template from a South African perspective and to determine the consequences for taxpayers arising from the information required to be disclosed. It follows that this paper will focus, in particular, on the challenges and consequences that exist within a South African context for a South African taxpayer conducting business in different tax jurisdictions. The paper will further analyse the CbC Template requirements in light of the legislative requirements for Transfer Pricing Documentation in South Africa.