Author: Pieter Faber (SAIT Technical Executive: Tax Law & Policy) Introduction This case is an appeal to the Gauteng division of the High Court in Pretoria by the taxpayer, Coltrade International CC (‘Coltrade’), against a tariff determination made by SARS, in terms of section 47(9)(a) of the Customs and Excise Act (No. 91 of 1964) (‘Customs Act’), that the coconut milk, coconut cream and coconut powder imported by Coltrade was incorrectly classified. The parties have agreed that the dispute would apply to all three the products and if the taxpayer was not successful on appeal, SARS’ tariff determination would apply to all the goods in dispute. The court therefore had to determine which tariff heading would apply to the goods.
Tax News
New OECD recommendations may affect not-for-profit organizations
Over the past few years, the issue of “tax avoidance” has dominated agendas at both Canadian and international tax conferences. The issue has also received considerable news coverage as a result of the actions of certain large companies with complicated tax structures that were seen not to be paying their fair share of taxes. Many countries, including Canada, have been waiting to receive guidance on how to deal with this and other issues from the Organization for Economic Co-operation and Development (OECD), the premier supranational organization that helps governments implement international tax principles.
Streamlining the VAT registration process: an update
Background The Taxation Laws Amendment Act (31/2013) introduced legislative amendments aimed at streamlining the value added tax (VAT) registration process as contained in the Value Added Tax Act (89/1991). In the 2013 Budget Minister of Finance Pravin Gordhan indicated that there would be efforts to reorganise the VAT registration process in order to ease the compliance burden of the registration requirements. This culminated in amendments being made to Sections 23(3)(b)(ii) and 23(3)(d) of the VAT Act, respectively.
Transfer pricing – changes to secondary adjustments
By Christel du Preez, Senior Tax Manager Grant Thornton Johannesburg The proposed amendment The Draft Taxation Laws Amendment Bill 2014 proposes a revision of transfer pricing compliance in in the form of a deemed dividend, from 1 January 2015. It proposes that in future, the Section 31 secondary adjustment be deemed a dividend in specie, to be paid by the South African taxpayer to its foreign connected person.
New VAT rules may negatively affect farmers’ cash flows
By Cliff Watson, Tax Director Grant Thornton Johannesburg Usually, farmers are registered to pay VAT on a six-monthly cycle. This means that these farmers have to finance the VAT that they incur on their operating and capital costs for long periods before they get a refund from SARS. The VAT Act currently provides that some farmers may acquire certain goods that are used or consumed for agricultural, pastoral or other farming purposes at the zero-rate. This rule was implemented mainly to assist these farmers with their cash flow before they earn income from their produce.
Accommodation provided to employees
By David Honeyball, Tax Partner Grant Thornton Cape Some employers provide residential accommodation for their employees, especially when the employees work far from their homes. While this provides some practical benefit to the employees who save money and time by not commuting between home and work, they should be taxed on the value of the accommodation, whether it is furnished, unfurnished, supplied with or without meals, power, water or other utilities.
Global tax transparency – I can see clearly now – or can I?
There has been an abundance of press coverage on the subject of FATCA and numerous practitioners have offered helpful insights into the technicalities and operation of the new reporting rules. FATCA marked a pivotal start to some very serious moves on global tax transparency that are continuing apace. We now have the CRS (Common Reporting Standard) coming hazily into view and this subject of global tax transparency seems to be impressing on my day-to-day life given the global reach of my firm.
Do you have tax skeletons in your closet?
Author: Erich Bell (SAIT Technical) For most tax professionals, standing at a braai and explaining what one’s profession entails may be an uncomfortable experience, especially if one’s guests do not have an accounting or law background. Some of the questions that would normally arise include, ‘oh, so you work for SARS?’ or ‘that’s nice, I’m, however, not keen on talking about my financial affairs’. A couple of moments later, that awkward silence starts to set in. With this example, I’m almost certain that SARS officials receive an even warmer welcome among their fellow guests.
Carbon tax looms as Treasury and department finalise plans
Author: Paul Vecchiatto (BDlive) The Department of Environmental Affairs and the Treasury are finalising an approach to a carbon tax, says department deputy director-general Judy Beaumont. Addressing a media conference on Tuesday, Ms Beaumont said the introduction of a carbon tax was still considered one of the means to reduce SA’s high levels of greenhouse emissions. Last year, the Treasury issued a discussion document on the possible implementation of a carbon tax. The first phase of the tax will be for five years, from January 1 next year to December 31 2019, followed by phase 2 for another five years, from 2020 to 2025.
SARS takes another stab at interpreting the ‘group of companies’ definition
Author: Lisa Brunton (DLA Cliffe Dekker Hofmeyr) In our Tax Alert of 15 March 2013 we reported on the South African Revenue Services’ (SARS’) draft Interpretation Note on the interaction between the definition of a ‘group of companies’ as it appears in s1 and s41(1) of the Income Tax Act, No 58 of 1962 (Act). SARS embellished the draft Interpretation Note somewhat with the release on 24 October 2013 of Interpretation Note No 75 (IN 75) dealing with the exclusion of certain companies and shares from a ‘group of companies’ as defined in s41(1) of the Act. IN 75 has now been superseded by the release of Issue 2 of IN 75 on 22 September 2014.