Author: Esther van Schalkwyk, Tax Consultant, BDO South Africa Section 102 of the Tax Administration Act places the burden of proving, amongst other things, that an amount or item is deductible or may be set-off, on the taxpayer. SARS, on the other hand, bears the onus in respect of, amongst other things, the facts on which SARS based the imposition of an understatement penalty. The Tax Court recently handed down judgment in VAT case no. 867, in which the Court once again confirmed the importance of the onus of proof in tax disputes.
Author: Nyasha Musviba
South Africa has one of the broadest VAT bases on financial services, but is there room for the net to be widened?
Aurthur: Ferdie Schneider, National Head of Tax, BDO South Africa Valued-Added Tax (VAT) systems theoretically extend their bases as wide as possible to minimise economic distortionary effects so as to impact as little as possible on consumer choices. However, certain supplies of services still escape the VAT net, often due to their ‘difficult to tax’ nature. These typically include financial services. South Africa has one of the broadest (or most inclusive) VAT bases in the more than 160 jurisdictions that have VAT systems. Many VAT systems apply a broad brush approach when exempting financial services. Significantly, VAT systems often exempt ‘pure’ financial services and although intermediation or facilitation services could technically be taxed under a VAT system, these also often escape the VAT net as well.
Are Wealth taxes a likely probability for South Africa?
The Davis Tax Committee (DTC) consideration that a wealth tax for South Africans is not the universal solution to South Africa’s revenue needs. This is the view of Rhodes Business School Professor and DTC member Matthew Lester who was speaking at a BDO South Africa event last week. Professor Lester dissected the current taxation system within the country commenting on what is working, what isn’t and what changes need to be implemented for the future economic growth of the country.
Reduced tax assessments proposal only applicable for exceptional cases
Author: Erich Bell, Senior Tax Consultant at BDO SA Johannesburg, xx August 2015 – The 2015 Tax Administration Laws Amendment Bill (TALAB) proposes to amend the provisions regarding reduced assessments in the Tax Administration Act (TAA). If promulgated, this would affect taxpayers by reducing the time allowed for them to to request reduced assessments through the so-called ‘request for correction’ function on SARS’ eFiling to six months from date of assessment. A possible further six months’ extension could be granted in exceptional circumstances.
Considering the VAT effect of dividends
Author: Herman Viviers (North-West University) “A dividend in specie generally constitutes a distribution made to the beneficial owner of a share in any form other than in cash” Considering the VAT consequences for a VAT vendor who declares dividends to its shareholders, may at first appear to be simple. However, the VAT treatment seems to become more complex as soon as one tries to justify it in terms of the provisions contained within the Value-Added Tax Act (89 of 1991) (“VAT Act”). The purpose of this article is to take a closer look at the VAT consequences where a VAT vendor declares dividends (either in cash or in specie) to the beneficial owners of its shares and to justify it in terms of the provisions of the VAT Act.
A review of section 6quin
Author: Pieter van der Zwan (NWU) Pieter van der Zwan revisits the economic reasons for the introduction of section 6quin. Section 6quin was introduced into the Income Tax Act by the 2011 Taxation Laws Amendment Act as a measure to enable entities to provide services into Africa in a manner that such services were commercially viable. With the section having been in effect for more than 3 years now, it was indicated in the 2015 Budget Review that the concession contained in section 6quin would be withdrawn due to the significant compliance burden that it places on SARS and taxpayers as well as the fact that it is being exploited by some taxpayers.
Few Cape Town developers cashing in on inner city tax rebate scheme
Author: Bekezela Phakathi (BDlive) There have been few takers of the Urban Development Zone tax incentive in Cape Town. The scheme also appears to have done little to boost the availability of affordable housing in the city’s CBD. The scheme, introduced in 2003, is an incentive administered by the South African Revenue Service (SARS) aimed at revitalising inner city areas by attracting capital investments in commercial and residential property through a tax rebate.
Voluntary disclosure relief to be widened
Author: Ruaan van Eeden (Director at Cliffe Dekker Hoffmeyr The Tax Administration Act, No 28 of 2011 (TAA) currently provides for various forms of relief in respect of disclosures made by qualifying taxpayers of their tax defaults under the Voluntary Disclosure Programme (VDP). The recently published Tax Administration Laws Amendment Bill 2015 (TALAB) makes a welcome proposal to widen the scope of available relief to qualifying taxpayers, to include any penalties relating to the late payment of tax.
Davis Tax Committee: First interim report on mining
Authors: Gigi Nyanin and Nicole Paulsen The Davis Tax Committee (Committee) was established by the Minister of Finance (Minister) to give effect to government’s tax review and assessment of the tax policy framework and its role in supporting the objectives of inclusive growth, employment, development and fiscal sustainability, as proposed in the 2013/14 National Budget. The Committee submitted the First Interim Report on Mining (Report) to the Minister on 1 July 2015, and it was released for public comment on 13 August 2015. This Report is a provisional interim report and a useful point of departure for engaging with stakeholders before final and conclusive recommendations are made to the Minister, who will then determine any further steps to be taken with regard to the Report.
Beware of VAT zero-rating on sale of commercial property
Author: Ben Strauss (Cliffe Dekker Hofmeyer) If commercial immovable property is sold as a going concern and if certain requirements are met, then the sale can be zero-rated for value-added tax (VAT) purposes, in terms of s11(1)(e) of the Value-Added Tax Act, No 89 of 1991 (VAT Act). Among other things, it is a requirement that (i) the seller carries on an enterprise in relation to the property and (ii) the enterprise is an income-earning activity on the date of transfer of the enterprise. The term ‘enterprise’ is defined widely in s1 of the VAT Act and it is trite that the leasing of commercial immovable property is an enterprise for purposes of the definition.