South African Revenue Service (SARS) Commissioner, Tom Moyane, today announced the launch of random on-site inspections targeted at Cash & Carry businesses. This effort is part of the new focused approach, launched in December 2015, to combat non-compliance in several high-risk sectors, starting with the Cash & Carry sector. On-site inspectors will perform compliance checks to identify registration, filing non-compliance and thus flag any suspicious businesses.
Author: Nyasha Musviba
Changes to corrections of tax assessments
Cape Town – In future the SA Revenue Service (Sars) will not be permitted to entertain so-called “requests for correction” of tax assessments, except if it is satisfied that there is a “readily apparent” undisputed error in the assessment. This is according to the Tax Administration Laws Amendment Act of 2015, which was promulgated on January 8 2016. In the view of David Warneke, director and head of tax technical international audit, tax and advisory services company BDO South Africa, it is likely that taxpayers will be severely discriminated against by this amendment.
Preservation orders – the court sets a high bar for SARS
In The Commissioner for the South African Revenue Service v Sunflower Distributors CC and Others (66077/2015) [2015] ZAGPPHC 896 (17 November 2015), the court had to decide whether a provisional preservation order granted in favour of the South African Revenue Service (SARS) should be made final. In this case, the ‘First Respondent’, Sunflower Distributors CC, was placed under a final winding-up order on 15 September 2015, after the provisional order was granted on 28 July 2015. The author of the SARS founding affidavit stated that the preservation order was applied for as an interim measure to preserve realisable assets until the final winding-up order is granted and until final liquidators have been appointed by the Master of the High Court, and them taking charge of the assets. The provisional preservation order was granted on 8 September 2015.
Ruling on third-party backed shares
Section 8EA of the Income Tax Act, No 58 of 1962 (Act) constitutes an anti-avoidance provision which, if applicable, has the effect that the amount of any dividend or foreign dividend received or accrued to the holder of a preference share, is deemed to be an amount of income as opposed to exempt income for tax purposes. In order for the provisions of s8EA of the Act to apply, the preference share in question must be regarded as a ‘third-party backed share’.
SARS Binding Private Ruling – Qualifying distributions to be made by a REIT
Summary SARS issued a binding private ruling that determines the relevant year of assessment when considering whether a “qualifying distribution” is made by a REIT. Relevant tax laws This is a binding private ruling issued in accordance with section 78(1) and published in accordance with section 87(2) of the Tax Administration Act No. 28 of 2011. In this ruling references to sections are to sections of the Act applicable as at 29 June 2015. Unless the context indicates otherwise, any word or expression in this ruling bears the meaning ascribed to it in the Act. This is a ruling on the interpretation and application of the provisions of –
South Africa signed two new double tax agreements with Kenya and Hong Kong
Readers will note from SARS Watch that a new double taxation agreement between South Africa and Kenya was recently published in the Gazette. Subsequent to this, a further agreement, this time with Hong Kong, was published in the Gazette on 24 November 2015. Both of these agreements come into effect in South Africa as from 1 January 2016. In Kenya, the DTA also takes effect on 1 January 2016, whereas the agreement with Hong Kong will be effective in that jurisdiction from 1 April 2016.
Customs and excise legislation gets much needed overhaul
Author: Georgia Mavropoulos (EY). New legislation will affect customs systems, processes and policies. International conventions, best practice, globalisation, and technology have assisted in giving the South African customs legislative framework a make-over. This resulted in changes to systems, processes and policies affecting importers and service providers. The current Customs and Excise Act 91 of 1964 is over 50 years old, and is getting a long overdue overhaul.
New rules for international cooperation on taxpayer’s affairs
Author: Ferdie Schneider (BDO). Greater transparency will expose undeclared offshore accounts Globalisation has dramatically increased cross-border financial activities.This necessitated enhanced co-operation and understanding between tax authorities to curb tax evasion and to ensure a fair allocation of taxes among the jurisdictions in which the activities take place. The Organisation for Economic Co-operation and Development (OECD) developed a Common Reporting Standard (CRS) for the automatic exchange of information relevant to tax. Over 50 jurisdictions have agreed to comply with the CSR, including South Africa, committing to exchange data in September 2017. Other jurisdictions will participate from 2018.
The duty to exhaust internal remedies before applying to the High Court for a review
The duty to exhaust internal remedies before applying to the High Court for a review of a SARS decision in terms of the Promotion of Administrative Justice Act One of the most significant developments in South Africa’s fiscal law since its birth, some hundred years ago, has been the coming into existence of a constitutional right (as distinct from a very limited antecedent common law right) to administrative justice. This is one of the rights enshrined in the Constitutional Bill of Rights. It finds detailed expression in the Promotion of Administrative Justice Act 3 of 2000 (‘PAJA’).
Greater tax transparency for multi-nationals a step closer
Author: Amanda Visser (MoneyWeb). Additional record-keeping requirements published. The South African Revenue Service (Sars) has published additional record-keeping requirements for large multi-national companies which they will have to comply with in future. Many companies have already included some of the required information in their transfer pricing documentation and on their annual tax returns, but there seems to be uncertainty about the format in which it must be available to Sars.