South Africa: Interpretation note providing transfer pricing guidance on intragroup loans
Updated and effectively new interpretation note on intragroup loans
Updated and effectively new interpretation note on intragroup loans
The South African Revenue Service (SARS) on 17 January 2023 released the updated and effectively new interpretation note [PDF 350 KB] on intragroup loans.
SARS released a draft interpretation note on intragroup loans for comment in February 2022. Read TaxNewsFlash
KPMG observation
The 2023 interpretation note essentially contains what was in the 2022 draft interpretation note. However, there is additional guidance provided relating to the South African interest limitation rules, as well as on loans granted by a natural person or by a company (at the instance of a natural person) to a trust or a company that is a connected person in relation to a trust in terms of Section 7C of the Income Tax Act.
The 2023 interpretation note is the first finalised guidance relating to intra-group financial loans since Practice Note 2 (released in 1996), provides necessary guidance to taxpayers, and is aligned with global principles and guidance.
The focus by SARS on financial assistance transactions between connected persons has been steadily increasing and the long-awaited finalization of this interpretation note demonstrates SARS’ intention to closely scrutinise such transactions.
Read a January 2023 report [PDF 241 KB] prepared by the KPMG member firm in South Africa
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