Pretoria 7 April 2014 – The Minister of Finance Pravin Gordhan today (7 April 2014) officially launched the SA Tax Ombud whose objective is to review and address complaints by taxpayers regarding service, procedural or administrative issues relating to their dealings with the SA Revenue of Service (SARS). As announced in October 2013, retired Judge Bernard Ngoepe is the Tax Ombud.
Author: Nyasha Musviba
Managing indirect tax data in the digital age
Dealing with indirect tax data is the key to effective indirect tax management. But the variety of indirect tax data required by different jurisdictions and the sheer quantity of relevant data generated by large organizations can present a range of logistical issues. With the increased reliance on indirect taxes and the “fair tax” debate putting companies’ affairs firmly in the spotlight, we consider some key challenges faced by multinational tax, trade and finance departments.
Specifications for the reporting of information under FATCA, AEOI and domestic law
Pretoria 3 April 2014 – On 8 February 2013, the National Treasury and the South African Revenue Service (SARS) announced the start of negotiations with the US Department of the Treasury to enter into an inter-governmental agreement (IGA) with respect to the USA’s Foreign Account Tax Compliance Act (FATCA). The wording of a draft IGA has now been agreed upon and will be signed at Governmental level as soon as possible. When signed, the US Treasury will view South African financial institutions as being generally compliant with FATCA.
Subordination agreements: the Income Tax Act section 8f trap
Section 8F of the Income Tax Act, dealing with hybrid debt instruments was substituted by the Taxation Laws Amendment Act of 2013. In its substituted form the provision is considerably broader in scope than its predecessor. In particular it appears that certain subordination agreements may render the subordinated debt subject to reclassification as hybrid debt with potentially costly consequences. The new treatment applies to amounts incurred on or after 1 April 2014. In terms of section 8F if a debt instrument falls into classification as a hybrid then the effect is that interest incurred in respect of the hybrid debt instrument:
Employers – Get ready for the 2014 Employer Annual Reconciliation
Dear Employer From 1 April 2014 it will be time to submit your Employer Annual Reconciliation for the period 1 March 2013 to 28 February 2014. You are encouraged to submit your reconciliation early as this will give you time to resolve any issues which may arise. To help you get ready to submit, we would like to tell you about the changes you may expect this year: • Updated version of e@syFile™ Employer availableRemember to always backup your current information on your computer prior to installing a new version of e@syFile™ Employer, as the installation may delete your current information.
Grant Thornton IBR research also reveals South Africa’s “golden goose” still being taxed too heavily
New research from the Grant Thornton International Business Report (IBR) reveals that 64% of South African business leaders would welcome more global co-operation and guidance from tax authorities on what is acceptable and unacceptable tax planning, even if this provided less opportunity to reduce tax liabilities across borders This figure is in line with BRIC business leader responses (68%) while globally 53% of executives surveyed would also welcome greater global co-operation.
Preliminary Outcome of Revenue Collection for the 2013-14 Fiscal Year
JOHANNESBURG, 1 April 2014 – The 1st of April is traditionally the day we report our preliminary revenue outcome within twelve hours after the close of the fiscal year at midnight on the 31st of March. The February 2014 Budget sets SARS a revenue target of R899 billion. For the 2013/14 fiscal year which ended at midnight— SARS collected R899.7 billion which is R0.7 billion above the revised estimate in the 2014 Budget. Tax revenues grew and exceeded the previous year’s revenue collections of R814.1 billion by R85.7 billion Nominal GDP growth for 2013 remained subdued at 8.3% but tax revenue grew by 10.5%
Multinational organisations operating in Africa need to consider the tax treatment of their transactions upfront – or face significant tax exposure, warns PwC
Multinational organisations operating in Africa face significant tax exposure and risks in the form of withholding taxes. “Multinationals considering doing business on the continent need to consider the potential tax treatment of their transactions upfront,” says Elandre Brandt, an International Tax Partner at PwC and Head of the Africa Tax Desk based in Johannesburg. “Contractual terms may have a significant impact on the applicable withholding tax, and may range from anything between five percent to as much as 30% of the gross amount of the transaction,” warns Brandt. “Planning for a withholding tax liability allows for certainty regarding the tax liability associated with any commercial transaction.”
Legal professional privilege and invoices from attorneys
Author: Heinrich Louw (DLA Cliff Dekker Hofmeyer) On 17 March 2014 judgment was handed down in the Western Cape High Court in the case of A Company v Commissioner of the South African Revenue Service (case no 16360/2013 – as yet unreported). The facts were briefly as follows. The applicants were three companies in a group of companies. In the course of conducting an audit in the applicants’ tax affairs, the South African Revenue Service (SARS) directed a request for relevant material at the applicants in terms of s46 of the Tax Administration Act, No 28 of 2011.
Withdrawal of assessments under the Tax Administration Act
Author: Danielle Botha (DLA CLiff Dekker Hofmeyer) Section 98 of the Tax Administration Act, No 28 of 2011 (TAA) makes provision for the withdrawal of an assessment by the South African Revenue Service (SARS) in certain circumstances. Prior to its amendment, s98 allowed for the withdrawal of an assessment (despite no appeal having been noted or objection lodged), that was: a) issued to the incorrect taxpayer; b) issued in respect of the incorrect tax period; or c) issued as a result of an incorrect payment allocation.