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’.
Tax News
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.
Africa tax in brief
Author: Celia Becker. ANGOLA: Budget Law 2016 adopted by National Assembly The Angolan National Assembly adopted the final version of Budget Law 2016 on 11 December 2015, following its approval of the Program of Economic Diversification on 7 December 2015. The Program includes the introduction of the Special Contribution on Banking Transactions (“SCBT”) and the Special Contribution levied on transfers for the payment of technical assistance or management fees. The SCBT is to be levied at a rate of 0.1% on the value of each banking transaction (excluding the payment of salaries and other payments of a personal nature) performed by financial institutions, including banks, leasing companies, insurance and reinsurance companies, and investment companies.
Interest(ing) withholding tax
Author: Michael Reifarth (Tax Executive at ENSafrica). The Taxation Laws Amendment Act of 2015 (“Amendment Act”) was promulgated on 8 January 2016 and contains a number of legislative changes to the Income Tax Act, 58 of 1962 (“the Act”). The Amendment Act contains some long-awaited amendments to the provisions that regulate the interest withholding tax (“IWT”). This article examines two of the more important changes that should be borne in mind by parties affected by the IWT.
Unilateral extension of prescription in certain specific tax matters
Author: Carmen Gers and Chris de Bruyn (ENSafrica). Section 99 of the Tax Administration Act, 28 of 2011 (“Tax Admin Act”), which regulates prescription in relation to tax assessments, provides that a three-year prescription period applies where the South African Revenue Service (“SARS”) has had a previous opportunity to assess a taxpayer (e.g. income tax) and a five-year prescription period applies in the case of self-assessment (e.g. value added tax and employees’ tax). In an ENSafrica article dated 19 August 2015, we addressed the proposed unilateral extension of prescription by SARS as was provided for in the draft Tax Administration Laws Amendment Bill (“Draft Bill”), a copy of which can be found here.