Sasol Form 20-F for the year ended 30 June 2021 - Book - Page 99
acquisition of shares in companies with
tax losses (or expected tax losses) in
excess of R50 million;
foreign insurance premiums paid in
excess of R5 million;
payment to foreign service providers
rendering services in SA in excess of
R10 million; and
transactions entered into by a closure
rehabilitation company or trust prior to a
final closure plan of the relevant
prospecting right, mining right or mining
permit that directly or indirectly
distributes, authorises the withdrawal or
transfer or authorises the use as security
exceeding R10 million in any year of
assessment.
Where there is a deviation from the arm’s
length principle, the price charged between group
entities (where one of those entities is a tax resident)
which is different from what would have been
concluded at an arm’s length basis between unrelated
persons and to tax the entity concerned is adjusted to
increase the taxable income of the tax resident (also
known as a primary adjustment). In addition, the
adjusted amount is also deemed to be a dividend (also
referred to as a secondary adjustment) that will be
subject to dividend withholding tax, as well as the
relevant penalties and interest is levied should such an
adjustment occur.
Although not a member, South Africa is an
observer of the OECD and therefore closely monitors
the developments within the OECD. South Africa
participated in the BEPS project initiative by the
OECD. This influenced certain legislation amendments
in the South African Income Tax Act as well as the
adoption of three-tiered documentation regulatory
obligations such as the country-by-country reporting
(CBC), master file and local file. In addition to the
OECD-recommended three-tiered documentation for
transfer pricing, South Africa has also prescribed
additional documentation to be retained by South
African taxpayers in support to cross-border
transactions entered into by the taxpayer as well as nonSouth African resident connected party transactions
with third parties.
Excluded from RAs are:
transactions listed above where the tax
benefit is less than R5 million; and
transactions where the financial reporting
and tax classification differs and the tax
benefit is not the main benefit of the
transaction.
United States federal income taxation
Non-compliance to this legislation will trigger
significant penalties on a monthly basis.
The following is a general summary of the
material US federal income tax consequences of the
ownership and disposition of shares or ADSs to a US
holder (as defined below) that holds its shares or ADSs
as capital assets. This summary is based on US tax
laws, including the Internal Revenue Code of 1986, as
amended (the Code), Treasury regulations, rulings,
judicial decisions, administrative pronouncements, all
as of the date of this annual report, and all of which are
subject to change or changes in interpretation, possibly
with retroactive effect. In addition, this summary is
based in part upon the representations of the Depositary
and the assumption that each obligation in the Deposit
Agreement relating to the ADSs and any related
agreement will be performed in accordance with its
terms.
Transfer pricing and Base Erosion and Profit Shifting
Project (BEPS)
Transfer pricing was introduced in South
Africa in 1995, and the transfer pricing principles
adopted largely follow the Organisation for Economic
Co-Operation and Development (the OECD) guidelines
on transfer pricing. The main requirement is to ensure
that a transaction is concluded at arm’s length and that
the transfer pricing between group entities is also at
arm’s length (also known as the ‘arm’s length
principle’).
The OECD guidelines prescribe
methodologies for determining arm’s length pricing
which have been adopted by many countries
including South Africa for their local transfer pricing
regulation.
US holders are strongly urged to consult their
own tax advisors regarding the specific US federal,
state and local tax consequences of owning and
disposing of shares or ADSs in light of their particular
98