Multinational organisations operating in Africa face significant tax exposure and risks in the form of withholding taxes. “Multinationals considering doing business on the continent need to consider the potential tax treatment of their transactions upfront,” says Elandre Brandt, an International Tax Partner at PwC and Head of the Africa Tax Desk based in Johannesburg. “Contractual terms may have a significant impact on the applicable withholding tax, and may range from anything between five percent to as much as 30% of the gross amount of the transaction,” warns Brandt. “Planning for a withholding tax liability allows for certainty regarding the tax liability associated with any commercial transaction.”
Author: NASHIRA DAVIDS and PHILANI NOMBEMBE MODEL CITIZEN: International swimwear model Candice van der Merwe arrives at the Cape Town High Court with SARS aiming to haul her and her father before an inquiry for tax fraud Picture: Swimwear model Candice van der Merwe’s life has been “devastated” by the “draconian” South African taxman. Yesterday the Cape Town High Court ordered that she could be hauled before a SARS tax inquiry. Her father, Cape Town businessman Gary van der Merwe, has been involved in tax fraud litigation amounting to millions of rands for almost a decade. The 21-year-old model claimed late last year that an unknown Arab admirer gave $15.3-million (about R168.3-million) after she caught his eye at a private Seychelles resort.
Author: Andrew Lewis (Senior Associate at Cliff Dekker Hofmeyer) The tax implications for the various participants of a share incentive scheme are complex and the legislation is not necessarily clear. In recent years, share incentive schemes have been a particular focus of the South African Revenue Service (SARS) and National Treasury with regular amendments to the tax legislation. It is no wonder that we see a number of binding private and binding class rulings being issued by SARS that relate to share incentive schemes. Binding Private Ruling No 161 (BPR 161) is one such recent ruling, released on 5 February 2014, which deals with the income tax and employees’ tax consequences for the employer company and the trust used to facilitate an employee share ownership plan (ESOP).
An interesting judgment was handed down in the North Gauteng High Court on 3 October 2013 in the matter of Commissioner for the South African Revenue Service v Miles Plant Hire (Pty) Ltd (case no 23533/2013). Miles Plant Hire (Pty) Ltd (the taxpayer) was involved in a dispute with the South African Revenue Service (SARS) in terms of which an appeal was pending. The taxpayer adopted a resolution to file for business rescue. When SARS became aware of the resolution, it brought an application for the setting aside of the resolution, and for the taxpayer to be wound up in terms of section 177(1) of the Tax Administration Act, No. 28 of 2011 (the TAA).
Pretoria – Julius Malema is seeking to delay a sequestration case brought against him by the SA Revenue Service (Sars), the High Court in Pretoria heard on Monday. Malema’s legal team brought an application asking for the matter to be postponed because he wanted to reverse an admission of liability, which he signed last year during negotiations with Sars.
THE tax consequences of decisions made in the boardroom have been highlighted in some recent court cases, where judgments were made against parties who had entered into transactions that were motivated by the potential tax benefits it would bring rather than the profits they would generate. A judgment laid down in the case of ABC vs the South African Revenue Service (SARS) heard in the Western Cape Tax Court last year reiterated the importance of paying attention to the details of a transaction as reflected in the financial statements, including related taxes. ABC acquired land with a forest on it and carried on forestry activities on the land. It then sold the land together with the forest for a specific amount, of which R144.7m related to the forest. The question before the court was whether the R144.7m should be included in ABC’s gross income.
The upcoming Budget Speech comes against the backdrop of a depressing South African growth rate, stubbornly high unemployment, a depreciating Rand (with more US tapering still to come), continued strikes in the mining sector, deadly service delivery protests and declining tax revenues. On a more positive note: In November 2013 Minister Gordhan pointed to the continued growth in tax compliance by South Africans and said: “… the ability to collect tax revenue …to finance the provision of public services and socioeconomic infrastructure has been a cornerstone of our democracy these 20 years.”
The South African Revenue Service (SARS) recently released Binding Private Ruling 159 (Ruling), which deals with the disposal of assets, being shares, in terms of an amalgamation transaction immediately after having acquired those shares in terms of an asset-for-share transaction. The facts were that companies A and B are controlled by various shareholders (individuals and family trusts). The shareholders wanted to hold their investments through a single company and not through both companies A and B.
Pretoria – South African billionaire Mark Krok’s local assets, worth R298m, were placed under curatorship by the North Guateng High Court in Pretoria on Friday. The SA Revenue Service (Sars) obtained a final preservation order against the businessman. Judge Hans Fabricius confirmed a provisional preservation order granted in February last year against Krok’s South African assets. The assets include a large portfolio of shares in JSE-listed companies such as African Bank, BHP Billiton, Bidvest, First Rand, MTN, Vodacom, Sasol, SABMiller, and Tsogo Sun. They also include a plot in Plettenberg Bay, a R40m property in Clifton and a Jeep Sahara.
Durban tender queen Shauwn Mpisane has walked out of the Durban Regional Court a free woman after the state withdrew more than 100 tax fraud charges against her. Mpisane, the owner of Zikhulise Cleaning, Maintenance and Transport, was charged with defrauding the SA Revenue Service of R4.7 million by submitting false VAT invoices, but applied to National Director of Public Prosecutions Advocate Mxolisi Nxasana to have the case withdrawn over prosecutorial misconduct. This morning Nxasana was at court for the hearing, at which prosecutor Arno Rossouw told Magistrate Blessing Msane that he had been instructed to withdraw the case in terms of Section 6 (b) of the Criminal Procedure Act.