Author: Celia Becker (ENSAfrica). BOTSWANA: Protocol to treaty between Botswana and Sweden enters into force The amending protocol to the Botswana/Sweden Income Tax Treaty (1992), which was signed on 20 February 2013, entered into force on 1 December 2015. The protocol generally applies from 1 December 2015 for the provisions on exchange of information and from 1 January 2016 for the remaining provisions.
Author: Nyasha Musviba
SARS ruling on a share subscription transaction followed by a share
Author: Mansoor Parker (Tax Executive at ENSAfrica). On 17 March 2016, the South African Revenue Service (“SARS”) issued an interesting binding private ruling (“BPR 227”) concerning a share subscription transaction which was followed by two share buyback transactions. BPR 227 deals with an area that National Treasury and SARS have identified as a problem, namely where a shareholder disposes of its shares through means of a share buyback as opposed to selling the shares outright to a third party. Before dealing with BPR 227 we will explain the background to this issue, the steps taken by National Treasury and SARS to deal with this issue and why BPR 227 was treated differently.
Draft regulations for the implementation of Country-by-Country reporting published in South Africa
Author: Arnaaz Camay (Tax Executive at ENSAfrica). The South African Revenue Service (“SARS”) is, in accordance with section 3(2)(j) of the Tax Administration Act, 28 of 2011 (the “TAA”), responsible for giving effect to the Country-by-Country Reporting Standard for Multinational Enterprises (the “CbC Reporting Standard”) which was developed under the Organisation for Economic Co-operation and Development’s (“OECD’s“) base erosion and profit shifting (“BEPS”) Action Plan 13 – “Re-examine Transfer Pricing Documentation”. The OECD’s recommendation under Action Plan 13 was that all countries should adopt a standardised approach to transfer pricing documentation which follows a three-tiered structure consisting of a master file, a local file, and country-by-country (“CbC”) report.
SARS Tax Clearance Certificate – be cleared online
Author: Sduduzo Mhlongo (ENSAfrica candidate attorney). The South African Revenue Service (“SARS”) has introduced a new Tax Compliance Status System (“TCS”) from 18 April 2016 in an effort to improve compliance and to make it easier for taxpayers to manage their tax affairs. The Tax Compliance Status System is a holistic view of the tax compliance level across all registered tax types. The new system makes it stress-free for taxpayers to obtain a Tax Clearance Certificate (“TCC”) and allows taxpayers to obtain a Tax Compliance Status PIN which can be used by authorised third parties to verify the taxpayer’s compliance status online via SARS eFiling. There are 2 steps in the process of obtaining a TCS:
SARS issues important tax ruling for renewable energy financing structures
Author: Mansoor Parker (ENSAfrica). On 13 April 2016, the South African Revenue Service (“SARS”) issued Binding Private Ruling 228 (“BPR 228”), which dealt with the issue whereby a project company becomes an operating company for the purpose of s8EA of the Income Tax Act, No 58 of 1962 (“ITA 1962”). This question is an important one in the context of financing the activities of renewable energy project companies but its relevance stretches further to many other infrastructure-related project companies.
Successive corporate reorganisation transactions
Authors: Gigi Nyanin and Nicole Paulsen. The South African Revenue Service (SARS) released Binding Private Ruling No 230 (Ruling) on 4 May 2016, which deals with successive corporate reorganisation transactions. The Ruling concerns the tax consequences of the disposal of an asset in terms of an ‘asset-for-share’ transaction as defined in s42(1) of the Income Tax Act, No 58 of 1962 (Act) within 18 months of its acquisition in terms of an ‘intra-group transaction’ as contemplated in s45(1)(a) of the Act. The Ruling concerns the tax consequences of the disposal of an asset in terms of an ‘asset-for-share’ transaction as defined in s42(1) of the Income Tax Act, No 58 of 1962 (Act) within 18 months of its acquisition in terms of an ‘intra-group transaction’ as contemplated in s45(1)(a) of the Act.
VAT – Consequences of non-registration for VAT
The Value Added Tax Act 89 of 1991 (the VAT Act) requires VAT to be levied by a vendor on the supply of goods or services in the course or furtherance of an enterprise carried on by the vendor. A vendor is any person who is or is required to be registered in terms of the VAT Act. The fact that a vendor includes any person that is required to be registered makes it clear that a person’s liability for VAT is not dependent on whether the person is in fact registered as a vendor but rather whether the person is required to be registered as a vendor. The VAT Act requires registration as a vendor on either a prospective or retrospective basis. On a prospective basis, a person would be required to register as a vendor on the first day of the month in which the total value of Read More …
Tax Administration – Onus of proof for understatement penalty
As a basic principle, under section 102(1) of the Tax Administration Act 28 of 2011 (the TAA), the onus of proof that an amount is not taxable or that an amount is deductible, rests on the taxpayer, whereas under section 102(2) of the TAA, the onus of proof pertaining to the facts upon which an understatement penalty is imposed, is upon the South African Revenue Service (SARS). Too often, upon the conclusion of investigations or reviews, SARS threatens exorbitant understatement penalties for seemingly innocuous and easily resolvable queries. A good example is the classic turnover/expenditure reconciliation process which could produce, in certain instances, horrendous results for a taxpayer where the calculations are devoid of commercial logic.
International Tax – DTA with Hong Kong
The Tax Treaty (and Protocol) between Hong Kong and South Africa has been ratified by both countries with the date of entry into force from 20 October 2015. In South Africa, it was published in the Government Gazette No. 39444 on 24 November 2015. The provisions of the treaty will apply in Hong Kong for years of assessment beginning on or after 1 April 2016. In South Africa, it applies from 1 January 2016 for amounts held at source, and for years of assessment beginning on or after 1 April 2016 in respect of other taxes. In general, the treaty follows the OECD Model Tax Convention. We highlight below some of the departures from the Model and other notable clauses.
Draft Carbon Tax Bill – Liable entities
The South African National Treasury has published a Draft Carbon Tax Bill (the Bill) for public comment. This article explores the aspects of the carbon tax regime that will feel out-of-the-ordinary for professional tax practitioners. Like the phenomenon to which it is intended to respond, namely climate change (as much an economic challenge as an environmental one), a comprehensive response to the carbon tax will require tax professionals to look beyond their usual sphere of operations and to cooperate with professionals from a range of other disciplines. This is also a function of the tax design which encompasses elements of tax law, carbon markets law, environmental law and financial and operational strategy. This article considers a fundamental connection established by the Bill between tax law and environmental law.