Articles
SARS the Unequal Opponent
It is well known that litigation in any court can be a protracted battle. It is a journey that litigants have to be prepared for, both mentally and financially. In the midst of it all, one should weigh up the principles (the subject matter) of the dispute and the commercial advantages of finding a resolution to the matter.
Overview on the Davis Tax Committee on the Corporate Income Tax Report
The Davis Tax Committee (DTC) has published final reports in respect of VAT, Corporate Income Tax, Public Benefit Organisations and Wealth Tax.
Tax Update: Country by Country Reporting
In 2013, in order to address the differences in tax systems of multiple countries, the Base Erosion and Profit Shifting Action Plan was adopted by the Organisation for Economic Cooperation and Development and G20 countries, including South Africa. This resulted in the development of Country-by-Country reporting.
Uncertainty Amongst Some VAT Vendors: What You Need to Know
We have recently noted the uncertainty amongst some VAT vendors regarding what rate of VAT to levy on some of their supplies in light of the VAT increase to 15% effective from 1 April 2018.
SARS Outsourcing One of Its Core Functions: Is This Cause for Concern
Currently over 2.3 million taxpayers and traders owe SARS just under R150billion. SARS announced on 9 March 2018 that it has outsourced the older and relatively smaller amounts due to it to a number of debt collection agencies.
What's In Store For South Africa?
In February, Shepstone & Wylie Attorneys, in partnership with the South Africa Institute of Tax Professionals (SAIT), hosted a corporate insights breakfast. Being held on the morning after the Budget Speech, the objective of the breakfast was to provide companies with insight into what to expect both politically and financially in the coming year.
Share Buy-Backs and Capital Gains
On 18 December 2017, the Taxation Laws Amendment Act, No. 17 of 2017 was promulgated, whereby amendments were made to paragraph 43A of the Eighth Schedule to the Income Tax Act. The amendment made to Paragraph 43 of the Eighth Schedule effectively provides that buy-backs that meet certain criteria are to be treated as proceeds for CGT purposes.
What to Expect from February's Budget Speech
South African citizens and investors are feeling slightly more optimistic now that Cyril Ramaphosa is the President of the ANC. That being said, however, February’s budget speech is still going to be a tense affair.
When SARS Must Provide Grounds for an Assessment
This case deals with SARS’ compliance with section 96 of the Tax Administration Act and the need to provide the taxpayer with a statement of the grounds for assessment.
Dividends Tax: South Africa's Most-Favoured Nation Clauses
Here we briefly outline the general tax implications when dividends are declared by a company that is a tax resident of South Africa to a shareholder that is not a tax resident of South Africa, as well as dividends declared by a company that is not a tax resident of South Africa to a shareholder that is a tax resident of South Africa.
Repealing the Unilateral Tax Relief Provision Pertaining to Foreign Remuneration 2.0
One of the proposals in the Draft Taxation Laws Amendment Bill,, is that the foreign employment remuneration exemption under section 10(1)(o)(ii) of the Income Tax Act be repealed. South African resident persons rendering services abroad will therefore have their remuneration subjected to South African tax as well as foreign tax. National Treasury and SARS have published a draft response document, and here follows the anticipated changes to this unilateral tax relief provision.
The Constitutionality of Implementing Retrospective Fiscal Legislation
In the recent High Court case of Pienaar Brothers (Pty) Ltd v Commissioner for the South African Revenue Service and Another, the Court had to decide whether retrospective fiscal legislation conflicts with South Africa’s constitutional principle
Transfer Pricing Regulations Pertaining to the Capital Sum of a Loan
Although South Africa no longer has a safe harbour rule, this does not mean that one will be entitled to deduct all interest paid on a loan. One will only be entitled to do so if one can show that the capital amounts obtained from the loan are of an arm’s length nature.
Repealing the Unilateral Tax Relief Provision Pertaining to Foreign Remuneration
The Draft Taxation Laws Amendment Bill published on 19 July 2017 proposes inter alia that the foreign employment remuneration exemption under section 10(1)(o)(ii) of the Income Tax Act 58 of 1962 be repealed, which means that South African resident persons rendering services abroad will have their remuneration subjected to South African tax as well as foreign tax.
Trusts Update: The New Proposed Amendments to Section 7C
On 19 July 2017, National Treasury published the Draft Taxation Laws Amendment Bill 2017, which proposed inter alia that section 7C be extended so as also to apply to interest free or low interest loans, advances or credit that are made by a natural person or a company to a company that is a connected person in relation to a Trust.
Can Payment in the Form of a Loan Account Constitute Payment for VAT Purposes?
This case deals with Section 22(3) of the VAT Act - does the crediting of a loan account constitute payment of consideration?
2017 Budget Predictions
On 22 February, Finance Minister, Pravin Gordhan, will again have the unenviable task of presenting the 2017 budget, which, amongst other directives, will aim to alleviate the concerns of the international ratings agencies.
Input Tax on the Purchase of a Vehicle
Generally, a vendor is not entitled to deduct input tax on the acquisition of a "motor car." This general rule is however subject to certain exceptions which are contained in the provisos to section 17 (2)(c) of the Value-Added Tax Act 89 of 1991.
Base Erosion and Profit Shifting: Fixed Ration Rule
In October 2015, the OECD released its BEPS Action 4 Report on Limiting Base Erosion Involving Interest Deductions and Other Financial Payments. Chapter 6 of this report deals with a ‘fixed ratio rule’ - an entity should be able to deduct interest expense up to a specified portion of EBITDA, ensuring that a portion of an entity’s profit remains subject to tax in a country.
Concessions on the Draft Taxation Laws Amendment Bill and the Draft Tax Administration Laws Amendment Bill
The South African Treasury has made far-reaching concessions on the draft Taxation Laws Amendment Bill and the draft Tax Administration Laws Amendment Bill after public hearings highlighted the concerns of many stakeholders, including leading tax experts.
The Davis Tax Committee's Second Interim Report on Estate Duty
The Davis Tax Committee released its final interim report on estate duty on 24 August 2016. Recommendations affect the existing tax exemptions applicable to transfers of assets between spouses. The Committee believes that the estate duty regime in South Africa must be reviewed in order to establish an effective and equitable package of major abatements and rates.
Will it be the Luck of the Irish or Will Apple be Left Paying the Bill?
On 30 August 2016, following an in-depth state aid investigation launched in June 2014, the European Commission concluded that Ireland granted undue tax benefits of up to €13 billion to Apple.
Income Tax Return for Companies (ITR14): The New Country-by-Country Reporting Requirements
On 18 April 2016, SARS updated the ITR14 to include new disclosure requirements in respect of transfer pricing, reflecting the Davis Tax Committee recommendations for inclusion in the Country by County report in terms of the OECD's BEPS Project.
REITS as an Investment Vehicle
REIT's have become a popular investment tool in SA. It is recommended that investors understand the anomalies of section 25BB of the Income Tax Act prior to investing in REIT's.
OECD/G20 BEPS Project and Cross-Border Tax Avoidance
Developing countries suffer the most from the consequences of BEPS. In order to overcome these consequences, the OECD/G20 embarked on the BEPS Project, which seeks to eliminate opportunities and close the loopholes for cross-border tax avoidance.
Filing Season 2016: Tax Tips for Taxpayers and Insights for Small Business Owners
The 2016 Tax Season opened on 1 July for taxpayers submitting for the March 2015 - February 2016 tax year.
Proposed Changes to the Special Voluntary Disclosure Programme
On July 20 2016, the National Treasury announced its proposed changes to the Special Voluntary Disclosure Programme.
Tax on Sugar-Sweetened Beverages in South Africa: #Sweet or #Notsosweet?
Obesity has become a major concern in South Africa. In order to tackle this problem, the government has proposed a tax on sugar-sweetened beverages (SSBs), with effect from 1 April 2017.
SARS Rejects Vendor's VAT Claims
It is important for vendors to ensure that they keep records of all invoices they receive or issue when conducting business, as SARS is entitled to reject a vendor's claim upon failure to provide sufficient documentary evidence.
Taxpayers Granted an Amnesty in Respect of Offshore Assets and Income
The Voluntary Disclosure Programme announced by Pravin Gordhan in the recent Budget Speech.
The 2016 Budget Speech: Tax Summary
In the main, the tax proposals seek to reduce the fiscal deficit through an increase in excise duties, the general fuel levy and environmental taxes. There will also be an increase in capital gains tax and transfer duty, together with fiscal drag on personal income tax to account for inflation.
Taxpayer Comes Out on Top in Salary Sacrifice Dispute
This case review puts employees’ tax implications of a company-car scheme back in the spotlight.
The Tax Administration Laws Amendment Act: Extension of Prescription & Request of Correction of Errors
SARS’ increased administrative powers to extend prescription periods is a cause for concern and a departure of a long-standing administrative procedure.
The Importance of Tax Litigation Strategy
Recently, the Kwazulu-Natal High Court considered the nature of tax litigation between the taxpayer and SARS. The court discussed the need for authentic, clear and satisfactory evidence, confidentiality with regard to a section 50 inquiry and the requirement for SARS to act in a fair and constitutional manner.
South African Revenue Service - Voluntary Disclosure Programme
On 9 July 2015 the South African Revenue Service ("SARS") issued a media statement informing all South African resident taxpayers, who hold foreign bank accounts, that an investigation was underway and taxpayers were therefore requested to make use of its Voluntary Disclosure Programme ("VDP") to regularise their tax affairs.
How to Substantiate an input tax deduction without a tax invoice
The VAT process is fairly simple if you have a tax invoice to substantiate your entitlement to an input tax deduction. However, if the supplying vendor fails to issue you with a tax invoice, the question then arises as to whether you, as the recipient vendor, can rely on section 20(7) or section 16(2)(f) of the Vale-Added Tax Act No 89 of 1991 (the “VAT Act”) by using the contract between the parties to substantiate your entitlement to an input tax deduction?
A How To Guide for SARS Objections and Appeals
As a taxpayer, if you receive an assessment from the Commissioner of the South African Revenue Services (“SARS”) that you disagree with, you can lodge an objection in line with the Tax Administration Act, No. 28 of 2011 (“the Act”)
Constitutional Court judgment on the in duplum rule does it limit interest payable on a tax debt?
The recent Constitutional Court judgment of Paulsen and Another v Slip Knot Investments 777 (Pty) Limited 2015 centered on the common law in duplum rule. The in duplum rule operates to protect debtors from becoming over-indebted to creditors by only allowing arrear interest to accumulate up to the capital amount loaned to a debtor. Interest ceases to run once the accumulated arrear interest equals the capital amount.
Proposed Criminalisation of Transfer Pricing
South Africa’s Parliamentary Trade and Industry Committee have called for the criminalisation of transfer pricing. Transfer pricing is the setting of the price for goods and services sold between controlled / related legal entities within an enterprise, for example, if a subsidiary company sells goods to a parent company, the cost of those goods is the transfer price.
Tax Update - UIF Contributions Reduced
Finance Minister, Nhlanhla Nene announced a reduction in the monthly contributions payable by employers and employees.
Uneventful Budget Speech comments Anton Lockem, Partner Tax Department
There appears to be a gradual move towards taxing the wealthy, manifesting itself through, amongst others, an increase of 1% on maximum personal tax rates; increase of transfer duties for properties above R2,25 million.
Taxation Update affecting company vehicles
The determined value in calculating the benefit on the use of a company vehicle will change with effect from March 1st 2015.
