The 2014 Budget review proposes that the ‘deemed loan’ secondary adjustment contained in section 31(3) of the Income Tax Act be scrapped. It was proposed that an alternative treatment be followed where the secondary adjustment will be deemed a dividend or ‘capital contribution’ which in turn would be subject to dividends tax. This seems to be closer to the STC regime of the old transfer pricing legislation prior to the change with effect of years of assessment commencing on or after 1 April 2012.
Author: Nyasha Musviba
SARS to Widen List of ‘Reportable Arrangements'
If SARS has its way, the current list of arrangements deemed reportable to SARS in terms of section 35(2) of the Tax Administration Act will be widened considerably. This is apparent from the release on 10th June of a Draft Public Notice (‘the Notice’) listing arrangements that would be deemed to be reportable in terms of the above provision. The Notice has been released for a second round of public comments.
Does the in duplum rule limit interest payable on a tax debt?
The in duplum rule is a South African common law rule which originated in Roman law and provides that interest on a loan or debt will cease to run when the amount of outstanding interest reaches the amount of the outstanding capital. The in duplum rule is based on public policy and protects debtors who are in financial difficulty and are unable to service their debts from an ever-increasing accumulation of interest1.
Preservation orders and the Tax Administration Act
Prior to the enactment of the Tax Administration Act No. 28 of 2011 (“TAA”), the Commissioner: South African Revenue Service (“Commissioner”) was required to apply for a preservation order under the common law, as the Income Tax Act did not itself contain a mechanism whereby the Commissioner could apply for a preservation order under the fiscal statutes to ensure the preservation of assets where there was a concern that a taxpayer may dissipate assets and frustrate SARS’ attempts to recover the tax due.
New VAT Regulations open Africa for SA business
Author: Diane Seccombe (Mazars) South African VAT vendors involved in the export of goods will warmly welcome new VAT regulations, which became effective on the 2nd of May 2014. South African legislation seeks to increase exports by incentivising exporters in many forms, and the Value-Added Tax Act (the Vat Act) is no exception. Where goods have been “exported” (as defined in section 1 of the Vat Act) by a vendor the supply is regarded as zero rated. A zero rated supply is beneficial as, despite
Where is tax dispute resolution and controversy heading?
Author: Johan van der Walt (KPMG) The tax world has changed globally (mainly OECD and G20 driven), in Africa (especially through African Tax Administration Forum initiatives) as well as locally (SARS becoming a world-class revenue authority with substantial technology and resource investment). Sharon Katz-Perlman, KPMG’s Head of Global Tax Dispute Resolution and Controversy recently observed: “Around the world, levels of tax disputes have reached record heights, and the rise in tax controversy shows no signs of abating.”
Preservation Order Assists SARS in Tax Action
Author: Beric Croome (ENSafrica) Prior to the enactment of the Tax Administration Act No. 28 of 2011 (“TAA”), the Commissioner: South African Revenue Service (“Commissioner”) was required to apply for a preservation order under the common law, as the Income Tax Act did not itself contain a mechanism whereby the Commissioner could apply for a preservation order under the fiscal statutes to ensure the preservation of assets where there was a concern that a taxpayer may dissipate assets and frustrate SARS’ attempts to recover the tax due.
Taxation working well but can be more efficient, says Judge Dennis Davis
Author: Amanda Visser (BDlive) South Africa was performing far better than any of the other developing countries that formed part of a recent World Bank study, it said. However, the country would experience “extraordinary instability” without social spending by the government and unless the system was made more efficient, said committee chairman Judge Dennis Davis. He said the committee was not looking for more money, but wanted to ensure the system worked at optimal levels.
Squeeze on personal taxpayer has reached its limits, SA warned
Author: Amanda Visser (BDlive) South Africa relies too heavily on personal income tax and on value added tax (VAT) in its overall tax mix. The tax system is “at full stretch”, and any further demands will distort economic activity and the behaviour of taxpayers. These warnings were sounded by Chris Evans, professor at the school of taxation and business law at the Australian School of Business. He said the scope for extracting tax in South Africa has been “fully utilised”.
African continent is complex and challenging to regulate tax legislation, according to PwC VAT guide
Africa, with its 54 countries, presents a complex and challenging environment to administer tax legislation. “Africa’s rapidly growing economy, complex consumer tax needs and increasingly complex tax regimes means that managing the tax burden for multinationals is a daunting task” says Charles de Wet, PwC Head of Indirect Tax for Africa. “Businesses entering African markets are faced with imprecise challenges of having to adapt to the various countries’ tax regulations. They can even suffer harsh consequences if they are not ‘Africa ready’,” says de Wet.