Authors: Ntsakisi Maswanganyi and Linda Ensor (BDlive) Higher than expected tax revenues and lower government spending has helped narrow the budget deficit and will bring down borrowing by the government. The main budget deficit — which covers all three spheres of government — is now estimated at 4.3% of gross domestic product (GDP) from 4.7%, the Treasury said on Thursday. This reduces the amount the government needs to borrow to finance its spending while satisfying ratings agencies that it was on track to bring down its large deficits. However, questions remain on how sustainable the narrowing was.
Tax News
An Overview of South Africa's Withholding Tax Regime
Author: Mansoor Parker (ENSafrica) Venture capital companies are a tax-favoured investment vehicle. The venture capital company (“VCC”) scheme, introduced in 2009, is a tax-based scheme designed to encourage individual and corporate investors to invest in a range of smaller, higher-risk trading companies by investing through the VCCs. Background Although South Africa has a well-developed private equity industry, its appetite for start-up, early stage and seed capital type transactions is low. To meet the challenge of access to venture capital for small and medium-sized enterprises, government introduced a tax incentive for individual investors, corporate investors and venture capital funds in qualifying small enterprises and start-ups. The tax incentive took effect from 1 July 2009.
An Overview of South Africa’s Withholding Tax Regime
Author: Mansoor Parker (ENSafrica) Venture capital companies are a tax-favoured investment vehicle. The venture capital company (“VCC”) scheme, introduced in 2009, is a tax-based scheme designed to encourage individual and corporate investors to invest in a range of smaller, higher-risk trading companies by investing through the VCCs. Background Although South Africa has a well-developed private equity industry, its appetite for start-up, early stage and seed capital type transactions is low. To meet the challenge of access to venture capital for small and medium-sized enterprises, government introduced a tax incentive for individual investors, corporate investors and venture capital funds in qualifying small enterprises and start-ups. The tax incentive took effect from 1 July 2009.
'Rogue' Sars unit spied for Zuma
Author: Sam Sole (Mail & Guardian) A new twist in the ongoing saga of spy vs spy in the South African Revenue Service can now be revealed. The controversial South African Revenue Services (Sars) intelligence unit, which was recently disbanded following headlines that “Sars bugged Zuma”, in fact spied for Zuma. The unit was shut down by new Sars commissioner Tom Moyane in December last year after the report of the Sikhakhane panel of inquiry, which accused the alleged “rogue” unit of illegal intelligence gathering.
‘Rogue’ Sars unit spied for Zuma
Author: Sam Sole (Mail & Guardian) A new twist in the ongoing saga of spy vs spy in the South African Revenue Service can now be revealed. The controversial South African Revenue Services (Sars) intelligence unit, which was recently disbanded following headlines that “Sars bugged Zuma”, in fact spied for Zuma. The unit was shut down by new Sars commissioner Tom Moyane in December last year after the report of the Sikhakhane panel of inquiry, which accused the alleged “rogue” unit of illegal intelligence gathering.
Who is obliged to report a reportable arrangement?
The list of reportable arrangements was extended by the South African Revenue Service in a notice (SARS Notice) published on 16 March 2015 in terms of s35(2) and s36(4) of the Tax Administration Act, No 28 of 2011 (TAA). The SARS Notice has caused some consternation. However, if one considers the obligation to notify SARS of reportable arrangements, the effect of the SARS Notice is perhaps not as far-reaching as first appears.
Amending a statement of grounds of assessment
Judgment was delivered by the Tax Court in the matter between ABC (Pty) Ltd v Commissioner for SARS (case number 13238/2008, as yet unreported) on 8 December 2014. The matter concerned, among other things, an application by the South African Revenue Service (SARS) to amend its statement of grounds of assessment. Rule 13 of the previous rules of the Tax Court and rule 35 of the new rules allow parties to amend their pleadings on application. The question is, however, to what extent the court will allow for such amendments.
Interpretation of exemption provisions
The Tax Court gave judgment in the matter of ABC (Pty) Ltd vCommissioner for the South African Revenue Service (case number 13512, as yet unreported) on 30 March 2015. Even though the case concerned secondary tax on companies (STC), which has been replaced by dividends tax, it is interesting to see how the court dealt with the interpretation of an exemption provision.
Capital gains tax deferred
Put simply, capital gains tax (CGT) is levied on the capital gain arising on the disposal of an asset, that is, on the difference between the base cost of the asset and the proceeds accruing on disposal. In terms of paragraph 35(4) of the Eighth Schedule to the Income Tax Act, No 58 of 1962 (Act) when a person disposes of an asset during a current tax year and that person becomes entitled to any amount which is payable in future tax years, that amount is deemed to have accrued to that person during the current tax year. So, if the price of an asset is paid, say, in three equal instalments over three tax years, the person disposing of the asset must account for CGT on full price in the first tax year, that is, the year of the disposal.
VAT treatment of supplies to non-residents
On 30 March 2015 the tax court delivered judgment in the matter of ABD CC v Commissioner for the South African Revenue Service. The matter concerned the Value-Added Tax (VAT) treatment of the supply of goods and services to non-residents in circumstances where such goods and services are physically supplied to and consumed by a person within South Africa. The vendor had certain agreements in place with foreign tour operators in terms of which the vendor would arrange tours in South Africa. The foreign tour operators, in turn, sold tour packages to their customers, who were foreign tourists wishing to visit South Africa.