Major implementation milestones are being met by members of the world’s leading forum on tax transparency as the international community continues to move ahead towards greater tax transparency. The imminent shift to the automatic exchange of information will send a strong warning to tax evaders. Significant strides towards a major increase in tax transparency have been made since last year when over 90 members of the Global Forum on Transparency and Exchange of Information for Tax Purposes committed to automatically exchange information, beginning in 2017 or 2018. Panama and the Cook Islands are the latest financial centers to join these commitments bringing the total number to 96.
Tax News
National Treasury forges ahead with carbon tax plans
Author: Ingé Lamprecht (Moneyweb). National Treasury has signaled its intention to forge ahead with the introduction of a controversial carbon tax, with the publication of a draft bill on Monday. It said however that it has taken the current state of mining and other distressed sectors into account. The combined effect of the exemptions in the carbon tax and the reduction in the electricity levy “will be designed to ensure that such sectors are not adversely affected when the carbon tax is implemented”. “The tax and revenue recycling measures are also designed to be revenue neutral from a macroeconomic perspective, but will not necessarily be neutral for (scope one) companies with significant emissions.”
Proposed gas emissions tax will not impact electricity prices, says Treasury
SA’S proposed taxes on gas emissions will not impact already high electricity prices, nor will it add pressure to sectors such as the mining industry, the Treasury said on Monday. The carbon tax, part of government efforts to reduce harmful emissions in Africa’s worst polluter, was postponed two years ago to 2016 after fears from industry that it would hurt profits already eroded amid a global commodities slump and higher electricity tariffs. In the draft bill, Treasury lists a number of allowances to mitigate the impact the tax would have on industries. Tax-free exemptions would range between 60% and 95% of total emissions, Treasury said.
Draft Carbon Tax Bill for public comment
Author: National Treasury The National Treasury has publishes the Draft Carbon Tax Bill for public comment. Briefly, the carbon tax seeks to price carbon by obliging the polluter to internalise the external costs of emitting carbon, and contribute towards addressing the harm caused by such pollution. The publication of the Draft Carbon Tax Bill provides an opportunity for further comments on the design and technical details of the carbon tax policy and administration. Written comments should be submitted by the close of business on 15 December 2015 to Dr. Memory Machingambi, email: Memory.Machingambi@treasury.gov.za Please click here to view media statement, Draft Carbon Tax Bill for comment and Draft Explanatory Memorandum on the Carbon Tax Draft Bill
‘Interest’ for purposes of Withholding Tax on Interest (WTI)
Author: Lisa Brunton (Cliffe Dekker Hofmeyr). The Taxation Laws Amendment Bill 2015 (Bill) proposes the insertion of a definition for the term ‘interest’ in s50A of the Income Tax Act, No 58 of 1962 (Act) to clarify the meaning of interest for purposes of the WTI. ‘Interest’ is to be defined in s50A of the Act with reference to paragraphs (a) and (b) of the definition of ‘interest’ under s24J(1), meaning that for WTI purposes, ‘interest’ includes “the gross amount of any interest or related finance charges, discount or premium payable or receivable in terms of or in respect of a financial instrument;” or “the amount (or portion thereof) payable by the borrower to a lender in terms of a lending arrangement as represents compensation for any amount which the lender would, but for such lending arrangement, have been entitled”.
Assuming contingent liabilities in acquiring a going concern
Author: Erich Bell, Senior Tax Consultant at BDO South Africa SARS issued a draft interpretation note (DIN) in September 2015 on the tax implications of the assumption of contingent liabilities where a business is sold as a going concern. This article sheds some light on the assumption of contingent liabilities which specifically formed part of the purchase price relating to the acquisition of the business as a going concern.1 A purchaser can settle the purchase price for the acquisition of a business as a going concern by employing a combination of: cash consideration, assuming the seller’s debts, assuming the seller’s contingent liabilities, loan funding, or share issues.
Claiming VAT prior to Registration
Author: Seelan Muthayan, Director of VAT at BDO South Africa Taxpayers are often unaware of their VAT registration liabilities, which can result in a retrospective VAT registration. This regularly leads to a liability for output tax on supplies made as amounts charged are generally deemed to be VAT inclusive. On the other hand, taxpayers may have incurred expenses during this period and may not be in a position to claim input tax deductions as they would not be in possession of valid tax invoices. This is as a result of them being registered for VAT when they incurred the expenses, with the tax invoices being rendered invalid as they would not contain the taxpayer’s VAT registration number.
Supreme court of appeal considers imprisonment for fraudulent VAT claims
By Esther van Schalkwyk (BDO South Africa) The Supreme Court of Appeal (SCA) recently handed down judgment in Grundling v The State and gave a prison sentence due to contraventions of the Value-Added Tax (VAT) Act. The appellant, Ms Grundling, was sentenced to 10 years in prison by the Pretoria Regional Magistrate’s Court, after pleading guilty to 30 counts of contravening the VAT Act. On appeal to the High Court, her sentence was reduced to 8 years. Her appeal to the SCA concerned the suitability of the sentence.
Adjustment of energy savings tax incentive
Author: Nicole Paulsen In recent years, the South African energy landscape has undergone significant changes with the introduction of a number of private and public sector renewable energy projects. In order to ensure the commercial viability of the renewable energy projects, Government introduced an energy efficiency program which provides for qualifying tax allowances so as to assist and encourage taxpayers to reduce their energy footprint.
Changes to the Income Tax Return for Trusts
Author: Mareli Treurnicht The South African Revenue Service (SARS) has amended the ITR12T form, (i.e. the Income Tax Return for Trusts) with effect from 12 October 2015. The form has been amended to include: certain changes to legislation; mandatory fields and sections which were previously optional; and automatic calculations. According to the SARS website, these changes arise from the implementation of system changes by SARS to cater for the processing of collective investment scheme (CIS) registrations and value-added tax (VAT) voluntary registrations in respect of vendors who have not yet made taxable supplies exceeding R50,000.00 per annum.