R'OOO R'OOO R'OOO R'OOO R' 000 R'OOO
6.3 UNILATERAL APPROACHES TO THE GATHERING OF THE REQUIRED INFORMATION
South Africa, section 72A places the onus on the taxpayer to report its share of the CFC's undistributed income and pay the tax owing in respect of that income. This is similar to most countries adopting CFC legislation, whereby the legislation sets out the preconditions which, if met, subject domestic taxpayers to liability.z6 Ithas also been said that the above disclosure may well precipitate the transfer pricing disclosure requirements of Practice Note 7.27
6.3 UNILATERAL APPROACHES TO THE GATHERING OF THE REQUIRED
COUNTRY Australia
Canada
Denmark
Finland
France
Germany
REQUIREMENTS
Operates a self-assessment system. No special information return requirements in the case of controllers of CFCs.
Domestic corporations must disclose on the corporate tax return all foreign affiliates. Resident individuals need to disclose their equity percentage interests in foreign affiliates and name the affiliates.3D
The parent corporation of the CFC must produce accounts of the CFC prepared in accordance with Danish tax legislation.
Specific provisions requiring taxpayers to report their direct and indirect shareholdings in CFCs.
Domestic corporations must produce a comprehensive statement listing the names and addresses of all foreign companies resident in a target territory in which the reporting company owns at least ten percent of the shares, financial statements for such companies, detailed calculations of taxable income and reconciliation with the financial statements, and so on.
Taxpayers must report investments in foreign corporations of 10 percent or more of the shares if held directly, or 25 percent or more if held indirectly. The taxpayer must also report in his annual tax return the ownership of shares in any foreign corporation subject to the provisions of the AStG due to the fact that all domestic shareholders are included in determining whether a foreign corporation is a CFC (i.e. no minimum ownership requirement is applicable).
30 The taxpayer must not only identify foreign accrual property income(FAPI) but also other income of theeFewhich is considered to be active business income.
Japan
New Zealand
Norway
Portugal
Spain
Sweden
United Kingdom
Taxpayers having an interest in a CFC must file an information schedule with their annual tax return regardless of whether any income of the CFC is attributable to them or not.
Taxpayers are required to disclose ownership interests in CFCs.
Taxpayers must report their holdings in foreign compames and provide the financial accounts of such companies if they own at least ten percent of the shares directly, or 50 percent indirectly. Because Norway takes into account all domestic shareholders in determining whether a foreign corporation is a CFC, all Norwegian taxpayers who own or control, directly or indirectly, shares or capital of a foreign corporation resident in a low tax country must report their holdings.
Taxpayers with CFC income must provide with their tax returns the financial statements of the CFC.
Taxpayers with CFC income must provide information with their annual general income or corporation tax form, setting out the name and fiscal residence of each CFC, accounts and profit statements, calculations of attributable income and proof of foreign taxes paid.
Domestic corporations must disclose on the corporate tax return all foreign affiliates, while individuals are not asked to disclose their interests (or even whether they have interests) in foreign corporations in the annual tax return unless they are reporting income from such corporations.
Previously there were no obligations on corporate taxpayers to provide information identifying interests in CFCs unless a direction was made by the Board of Inland Revenue (although the Board did have broad information gathering powers). The Board's discretion to
United States
direct application has since been removed31 and taxpayers owning interests in CFCs are required to disclose such information on the CT600B form accompanying their tax return.
Substantial and detailed reporting requirements. Any resident in or a citizen of the United States and any resident corporation who controls a foreign corporation must disclose the name and address of the corporation, financial statements prepared in accordance with generally accepted accounting principles and translated into English, details of certain non-arm's length transactions entered into by the foreign corporation as well as details of any other US person holding at least five percent of any class of shares of such foreign corporation. An information return must be completed and submitted to tax authorities by any US person acquiring more than five percent of any class of shares in a foreign corporation.32
Information gathering can be difficult in the case of more widely owned CFCs. In countries where the minimum percentage interest held is not applicable (i.e. jurisdictions which include all domestic shareholders for the purposes of determining whether a foreign corporation is a CFC, as in the case of Germany and Norway, all residents must report their participation in foreign corporations by way of a special information return. The returns are all filed with the federal tax administration, which is then in a position to determine whether German/Norwegian taxpayers own in aggregate more than 50 percent of the shares in the CFC.
In the absence of voluntary compliance by taxpayers, tax authorities have to rely on public information33and on their information gathering powers.34