Page 166 - SAIT Compendium 2016 Volume2

PN 7/1999 Income Tax acT: PracTIce noTes PN 8/2001
of the annual return of income must, therefore, be read as a requirement to submit such a policy document where a taxpayer has in fact already compiled one. In the event that a taxpayer has not compiled such a policy document it is suf cient to formally con rm that one has not been compiled.
As stated in the Practice Note SARS acknowledges that the preparation of transfer pricing documentation is time- consuming and expensive. The important general rule is that it is not expected of taxpayers to go to such lengths that the compliance costs related to the preparation of documentation are disproportionate to the nature, scope and complexity of the international agreements entered into between the taxpayers and connected persons.
Furthermore, where a taxpayer has provided full details of the international agreements that it has entered into with connected parties, the absence of formal transfer pricing documentation will not be regarded as non-disclosure. Taxpayers choosing not to prepare documentation must, however, realise that they are at risk and that it may be more dif cult to discharge the onus of proving that an arm’s length price has been established.
PRACTICE NOTE 8 OF 2001 – INCOME TAX: EXEMPTION FROM INCOME TAX IN TERMS OF SECTION 10 (1) (e) OF THE INCOME TAX ACT, 1962
Withdrawn.* SARS comment: See Interpretation Note 64.
* See http://www.sars.gov.za/home.asp?pid=54773.
158 SAIT CompendIum oF TAx LegISLATIon VoLume 2