Author: Okkie Kellerman (ENS Africa). Many countries have become more focused on combating tax avoidance. As such, transfer pricing compliance has become much more burdensome due to substantial documentation requirements and multiple filing deadlines. Multinationals (MNEs) have to take action to control their transfer pricing risks, but the cost of doing so could substantially increase.
Authors: Carmen Gers and Simone Krupanandham (ENS Africa). Section 9D of the Income Tax Act, 1962 (the Act) is aimed at South African residents who directly or indirectly hold more than 50% of the total participation (broadly speaking shares) or voting rights in a foreign company. A foreign company in this context is classified as a controlled foreign company (CFC). In terms of section 9D, the net income of the CFC is included in the relevant residents income in proportion to the residents effective participation rights in that CFC, thus resulting in the resident being subject to tax on such notional income imputed to it.
CAMEROON: Treaty with South Africa enters into force On 13 July 2017, the Cameroon/South Africa Income Tax Treaty, 2015 entered into force and generally applies from 1 January 2018. GHANA: Value-added tax (VAT) on selected medical supplies abolished In terms of the VAT (Exemption of Active Ingredients, Selected Inputs and Selected Drugs or Pharmaceuticals) (Amendment) Regulations 2017, presented to Parliament on 1 August 2017, the 17.5% VAT/National Health Insurance Levy on selected imported medicines that are not produced locally, is abolished pursuant to the Budget for 2017.
Author: Robert Gad, Nicolette Smit, Megan McCormack, Jo-Paula Roman(tax Directors at ENSAfrica). With virtual currencies such as Bitcoin becoming ever more popular and accessible, it is important that South African taxpayers carefully consider the tax and exchange control uncertainties that accompany the incorporation of these relatively new systems into businesses and/or investment portfolios. We highlight below some of the tax and exchange control consequences arising from transactions involving Bitcoin. We have not considered the tax and exchange control consequences of the mining of Bitcoin, as this will be considered in a separate article.
Author: Judith Becker (Tax Associate at ENSAfrica). In the 2017 South African Budget speech, the Minister of Finance raised governments concern that the current Controlled Foreign Company (CFC) rules do not capture foreign companies held by interposed trusts or foundations, and it was announced that countermeasures for the treatment of foreign companies held by trusts or foundations will be considered. Treasury, in an attempt to cover these loopholes, has introduced certain changes into the CFC legislation and a section that might have more disadvantages than Treasury intended.
Authors: Wayne Murray, Lebogang Maimane, John Gillmer and Badian Maasdorp. The Financial Services Board (FSB) sent a letter dated 6 September 2017 to its registered foreign financial services providers (FSPs) advising them that it had come to the attention of the FSB that certain foreign FSPs conducting financial services related business in South Africa (also referred to as the Republic below in quoted legislation) are not registered as external companies in the country. According to the FSB, this registration is required in terms of s23 of the Companies Act, No 71 of 2008 (Companies Act).
Author: Roxanna Nyiri, Director, BDO Tax. Insurance in todays world is no longer limited to a single country and has over the last few decades seen interesting global developments. Reinsurance and cell captive insurance have become an integral part of enterprise risk management. Reinsurance and cell captive insurance not only provide business with tools to manage their risk, limit their cost of insurance, but also to hedge against currency fluctuations. These developments, of course, also have their own unique tax consequences, especially where they span jurisdictional borders. With the advent of the Organisation of Economic Cooperation and Developments (OECDs) Base Erosion and Profit Shifting (BEPS) initiatives, tax authorities across the globe are scrutinising insurance structures from a tax perspective, especially with regard to transfer pricing. This increased scrutiny often leads to the cross border pricing related to intercompany insurance related transactions being challenged.
Author: Katrina Mabika is Tax Director: Advisory Services for BDO Zambia. Africas enormous potential as an economic growth hub can be realised by consolidating the regions economic integration and facilitating trade and labour mobility across the continent. Double taxation treaties are one of the ways to do this, enhancing our continents attractiveness as a trade destination and protecting the interests of African professionals, who often travel across the region for work.
Author: Roxanna Nyiri, National Head of Transfer Pricing and International Tax and Director BDO and Jolani Proxenos, International Tax & Transfer Pricing Consultant at BDO. Developing countries (or capital-importing countries) are making strong efforts to attract foreign investments. South Africa and Mauritius are seen as developing countries and have adopted tax incentive regimes to increase their attractiveness for Multinationals to set-up locally.
Author: Roxanna Nyiri, National Head of Transfer Pricing and International Tax and Director BDO Johannesburg. The OECDs base erosion and profit shifting (BEPS) has been at the forefront of international tax discussions over the last number of years. Multinationals are concerned with how they will be affected and how tax authorities will be applying BEPS regulations.