n May 2013 the Department of Treasury published a Carbon Tax Policy Paper for public comment. A revised version of the document was due to be published in July 2013, however, following public objection and comment this document was not forthcoming. In February 2014 the Minister of Finance confirmed in the Budget Speech that carbon taxes would be delayed until 2016 as “a package of measures is needed to address climate change and reduce emissions”. These measures include the development of a Carbon Offset in terms of which companies can reduce their tax liabilities.
Author: Nyasha Musviba
SA Reserve Bank amends exchange control rules
South Africa’s exchange control rules require that a South African resident wishing to assign intellectual property to a foreign entity must obtain prior approval from the South African Reserve Bank. The Reserve Bank’s Financial Surveillance Department has recently issued a circular amending the exchange control rules. The amendment relaxes the exchange control rules, to a limited extent, to allow unlisted South African companies to list on stock exchanges located offshore and raise foreign loans and capital more easily.
Supreme Court of Appeal addresses administrative fairness in raising assessments and disputes before the Tax Court
An interesting judgment was handed down in the Supreme Court of Appeal (SCA) on 12 June 2014 in the matter of Commissioner for the South African Revenue Service v Pretoria East Motors (Pty) Ltd (291/12) [2014] ZASCA 91. The taxpayer operated a car dealership in Pretoria. The South African Revenue Service (SARS) conducted an audit on the taxpayer in respect of its 2000 to 2004 years of assessments, and as a result raised various additional assessments in respect of, inter alia, income and value-added tax (VAT).
Tax exemption on foreign employment income
In terms of current practice, remuneration derived from services rendered outside of South Africa is, subject to certain requirements, exempt from normal tax in South Africa in terms of s10(1)(o)(ii) of the Income Tax Act, No 58 of 1962 (Act).
Tax fraudsters sentenced
The scheme was discovered after seven years when Sars became suspicious because so many taxpayers used the same addresses. One of the most complex tax fraud trials the SA Revenue Service (Sars) ever had to deal was concluded on Monday, when the leaders of a crime syndicate were sentenced to between 20 and 15 years’ imprisonment.
The fine line between a restricted and unrestricted equity instrument
The complex tax legislation applicable to share incentive schemes has resulted in a number of taxpayers requesting advance tax rulings from the South African Revenue Service (SARS). On 30 May 2014, Binding Private Ruling No. 170 (Ruling) was released by SARS, which dealt with the question of
National Treasury Released Draft Bills for Public Comment
National Treasury published the 2014 Rates and Monetary Amounts and Amendment of Revenue Laws Bill (‘Rates Bill’), the First Batch of the 2014 draft Taxation Laws Amendment Bill and Regulations (‘TLAB’) for public comment. This was announced via a media statement from National Treasury on 10 June 2014.
Secondary Adjustment for Thin Capitalisation Purposes
The 2014 Budget review proposes that the ‘deemed loan’ secondary adjustment contained in section 31(3) of the Income Tax Act be scrapped. It was proposed that an alternative treatment be followed where the secondary adjustment will be deemed a dividend or ‘capital contribution’ which in turn would be subject to dividends tax. This seems to be closer to the STC regime of the old transfer pricing legislation prior to the change with effect of years of assessment commencing on or after 1 April 2012.
SARS to Widen List of ‘Reportable Arrangements'
If SARS has its way, the current list of arrangements deemed reportable to SARS in terms of section 35(2) of the Tax Administration Act will be widened considerably. This is apparent from the release on 10th June of a Draft Public Notice (‘the Notice’) listing arrangements that would be deemed to be reportable in terms of the above provision. The Notice has been released for a second round of public comments.
Does the in duplum rule limit interest payable on a tax debt?
The in duplum rule is a South African common law rule which originated in Roman law and provides that interest on a loan or debt will cease to run when the amount of outstanding interest reaches the amount of the outstanding capital. The in duplum rule is based on public policy and protects debtors who are in financial difficulty and are unable to service their debts from an ever-increasing accumulation of interest1.