· Highly data-driven companies are three times more likely to report significant improvement in making big decisions, but only 1 in 3 executives say their organisation is highly data-driven · Many executives sceptical or frustrated by the practical application of data and analytics for big decisions, especially in emerging markets
Author: Nyasha Musviba
SA expected to continue its support of OECD Action Plan to address BEPS, says PwC Tax
In June 2012, the G20 leaders explicitly referred to “the need to prevent base erosion and profit shifting” (“BEPS”) in their meeting’s final declaration. In February 2013 the Organisation for Economic Cooperation and Development (OECD) issued a progress report ahead of that month’s G20 meeting and in July 2013 released its comprehensive Action Plan to address BEPS, containing 15 separate actions and work streams. The BEPS project marks the most significant change to international tax in decades and the fact that the first set of 7 deliverables have been issued by the OECD on time, as promised, in September 2014, is reflective of the global political consensus that is driving the momentum for change in the way international transactions are taxed.
MEDIA STATEMENT – Revised Draft Taxation Laws Amendment Bill, 2014, Revised Draft Tax Administration Laws Amendment Bill, 2014, and Response Document
The National Treasury today publishes the revised draft Taxation Laws Amendment Bill, 2014, (TLAB) revised draft Tax Administration Laws Amendment Bill 2014, (TALAB) and the draft Response Document that was presented to the Standing Committee on Finance (SCOF) in Parliament yesterday (15 October 2014).
SATG website now back online
Dear readers and subscribers, The SA Tax Guide Website is now up and running. The ISP had assured us that service wont be interrupted again.
No more VAT fat for developers
Cape Town – Unprepared property developers are in for a nasty shock when VAT relief designed to assist with cash flow comes to an end on the first day of 2015. BDO SA head of Tax Ferdie Schneider warned property developers that this will have a negative impact on their cash flow and are advised to prepare accordingly. “This VAT relief was implemented during a time of economic challenge in 2012 and applied to the temporary letting of residential property by property developers,” said Schneider. “In terms of the VAT relief, the temporary letting of residential property by a property developer was not subject to the normal change in use adjustments required by the VAT Act where goods or services on which a VAT credit was claimed are later applied for non-taxable purposes,” said Schneider.
Finance Minister Nhlanhla Nene to seek a broader tax base
By Wiseman Khuzwayo and Bloomberg Economists were bemused by an assertion by Finance Minister Nhlanhla Nene that South Africa needed to broaden its tax base in order to curb the budget deficit, as reported by Bloomberg yesterday. They said the tax base had shrunk due to weak economic growth. Nene is to deliver his first medium-term budget policy statement as finance minister next Wednesday. In it, he is expected to revise the fiscal deficit, inflation, gross domestic product (GDP) and net debt projections. The fiscal deficit projection given for 2014/15 is now expected to be closer to 5 percent of GDP.
PART B – OECD RELEASES FIRST PROPOSALS FOR FIGHT AGAINST TAX AVOIDANCE BY MULTINATIONALS
In Part A of this article we provided an overview of the Base Erosion and Profit Shifting (‘BEPS’) Action Plan and listed the 7 action points which were released by the OECD on 16 September 2014. In this second part of the article we provide an overview of the 7 action points. Action 1 of the BEPS Action Plan deals with the tax challenges of the digital economy. Consensus has been reached that the digital economy cannot be ring-fenced for tax purposes. The proposal includes a detailed analysis of the digital economy, business models, key features and resultant tax challenges of the digital economy. It was concluded that the collection of VAT in business-
PART A – OECD RELEASES FIRST PROPOSALS FOR FIGHT AGAINST TAX AVOIDANCE BY MULTINATIONALS
Author: BDO South Africa The Base Erosion and Profit Shifting (‘BEPS’) Action Plan originated from a need to address aggressive tax planning. The release by the OECD of the first 7 proposals of the 15-point Action Plan on 16 September 2014 is considered to be a milestone in the attempts to prevent the artificial shifting of profits through inter-company charges, the transfer of patent licensing rights and similar practices.
SARS Interpretation Note 75 Updated for Legislative amendments
Author: BDO – South Africa On 22 September 2014 SARS released Issue 2 of Interpretation Note 75 (‘IN75′). IN75 deals with the exclusion of certain companies and shares from a ‘group of companies’ as defined in section 41(1) of the Income Tax Act (‘the Act’) for purposes of the corporate rules. The issue that IN75 addresses is a contentious one which has given rise to much uncertainty in the past. Simply put, for the purposes of the corporate restructuring rules in sections 42 to 47 of the Act, the definition of a ‘group of companies’ is more restrictive than the general definition of ‘group of companies’ in section 1 of the Act.
The OECD/G20 Base Erosion and profit shifting project leaders shed light on the future of the international tax landscape
The Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Sharing (BEPS) Action Plan, approved by the OECD Committee of Fiscal Affairs (CFA) in June 2013 and endorsed by the G20 Heads of Government in September 2013, was formulated to combat international tax avoidance by multinational enterprises (MNEs) through artificially shifting profits to low tax jurisdictions and eroding the tax bases of their primary high tax jurisdictions of operation. The objective of the BEPS Action Plan is to secure government revenues by ensuring that profits are taxed in the jurisdiction where the economic activities generating such profits are performed and where value is created.