Introduction The number of exchange of information agreements has increased dramatically in recent years. It is commonly accepted that the need of the governments to have effective tax administrations (i.e., that their taxpayers pay the right amount of tax in their respective jurisdictions) must be balanced with the right of taxpayers to privacy and confidentiality. Otherwise, it is presumed that taxpayers will lose their confidence towards their tax systems and thus the agreements will be less effective.
Author: Nyasha Musviba
Proposal to amend Section 23N to better reflect market norms
By Webber Wentzel – South Africa Section 23N, which replaced section 23K with effect from 1 April 2014, prescribes rules to cap the deduction of interest incurred in respect of debt incurred by the acquirer of a business pursuant to a section 45 intra-group transfer, a section 47 liquidation distribution or a section 24O acquisition of shares. Section 23N applies to the refinancing of debt that was subject to section 23K and/or section 23N.
Proposed amendments to the Public Benefit Organisation provisions
Currently, conduit Public Benefit Organisations (PBOs) (PBOs which do not carry on a Public Benefit Activity listed in Part II of the 9th Schedule, but which provide funds or assets to other approved PBOs) are obliged to distribute or incur an obligation to distribute, to other approved PBOs, at least 75% of the donations received for which a section 18A deductible receipt was issued, within 12 months of the end of the year of assessment in which the donation is received.
Limited available to PPP receiving exempt income from government
The DTLAB introduces section 12NA, which aims to regulate the tax treatment of allowances available to public private partnerships (PPP) receiving exempt contributions from the government in terms of section 10(1)(zI). The proposed section will limit the allowable deduction to the amount of expenditure actually incurred in effecting improvements to land or buildings owned by government, reduced by the aggregate exempt contributions received from government. This limit is intended to address an ostensible “double dipping” in the context of PPPs.
Long term loan exemptions from transfer pricing provisions
New requirement for long term loan exemptions from transfer pricing provisions The current transfer pricing rules contained in section 31 of the Income Tax Act require the taxable income of a resident, which is party to an ‘affected transaction’, to be calculated as if the relevant transaction had been entered into on terms and conditions that would have existed between independent persons dealing at arm’s length (to the extent that a party to the ‘affected transaction’ derives a tax benefit).
What is your compliance status?
Currently, section 256 of the Tax Administration Act, No 28 of 2011 (TAA) houses the provisions governing the application for and granting of Tax Clearance Certificates (TCC). It is commonplace for taxpayers to require a TCC for a number of reasons including tenders, good standing, foreign investment allowance and emigration. The amendments to section 256 propose to remove the granting of a TCC and instead provide the taxpayer with a “confirmation of the taxpayer’s tax compliance status”.
New relief for small enterprises
In a review released by the Davis Tax Committee during July 2014, it was concluded that the lower tax rates applicable to small business corporations (SBCs) were not as effective as intended and resulted in tax relief only applicable to about 50 000 small entities, not all of which were in the professions intended to benefit. In order to promote the intention of SBC growth and provide relief for their tax compliance costs, it is proposed that all entities (including those with an annual turnover between ZAR1 million and ZAR20 million) would be subject to the normal corporate rate of 28%, but a refundable annual rebate of ZAR15,000 would be granted to SBCs.
Liquidations and arbitrations: the consequences of the definition of "debts" in section 345 of the Companies Act 61 of 1973 for bringing a liquidation application
By Ashton Crommelin of Hogan Lovells Interim costs awards in arbitration proceedings are not often the precursors to winding up applications. However, it may happen that if such an award of costs is not paid, the possibility of winding up the non-paying party may arise. This possibility leads to the following question, “Is a bill of costs drafted pursuant to an arbitration award and taxed by the taxing master of the High Court a “debt” for purposes of section 345 of the Companies Act 61 of 1973?”
Liquidation applications on a disputed tax debt and the applicability of section 177(3) of the Tax Administration Act 28 of 2011
Judge Andre van Niekerk handed down an interesting judgment in the High Court of South Africa (North Gauteng Division) on 30 September 2013. In my respectful opinion the judgment is insightful and is correct. The facts are fairly simple. Miles Plant Hire (Pty) Ltd (MPH) had a tax liability of R37 441 090.59 to the commissioner of the South African Revenue Services (SARS). SARS had levied a tax assessment in this amount on MPH, which included penalties and interest. When MPH failed to pay the assessment, SARS brought a liquidation application against it, which was opposed on two grounds.
Single registration – Changes to tax & customs registration
What is Single Registration? The way you register for tax & customs and update your existing details has changed from 12 May 2014. SARS will now have a ‘Single Registration’ of a taxpayer across all taxes they pay and legal entities they’re associated with. From a taxpayer’s view, you will only have to register once as a new taxpayer and there-after add only the relevant details when you start paying e.g. VAT. It will also now be easier to update your existing details.