The Organization for Economic Cooperation and Development (OECD) issued a 15 point action plan on base erosion and profit shifting (BEPS). The plan aims to “effectively prevent double non-taxation” and to ensure that low tax jurisdictions will not be able to continue with practices that “artificially segregate taxable income from the activities that generate it”. It seems that the action plan of the OECD will have a huge impact on worldwide transfer pricing and these actions must be carefully considered as it may have a major impact on how multinational groups operate.
Author: Nyasha Musviba
Tax in quantification of damages – Barclay v Road Accident Fund [2012] (3) SA 94 (WCC)
The decision of the Cape High Court in Barclay v Road Accident Fund [2012] (3) SA 94 (WCC) concerns the question whether, in quantifying damages for loss of earning capacity, the amount to be awarded to the claimant should be reduced to take account of the income tax that would have been payable if the claimant had received the amount by way of ordinary earnings, rather than as a lump-sum award of damages.
Estate Planning – Letter of wishes
Estate planning is a tricky and complex matter, replete with many pitfalls for the testator and his professional advisers. Tax planning is of course an important dimension of estate planning, and a close familiarity, on the part of the planner, with the Estate Duty Act, the Income Tax Act – and of course the provisions of the Wills Act – is essential.
Ringo’s R1.5m ‘tax fraud’
Afro soul musician Ringo Madlingozi could face up to 15 years in jail or a hefty fine if he is found guilty of tax fraud and theft, said a tax lawyer on Sunday. Madlingozi allegedly hasn’t been paying his employees’ Pay As You Earn (PAYE) to SARS, but has been deducting it from their salaries since 1999. He reportedly owes SARS R1.5m in PAYE and R421693 in VAT. A charge sheet, which The New Age has seen, shows that the star has been hit with more than 40 charges of theft by SARS. He appeared in the Johannesburg Magistrate’s Court on Wednesday and is expected to be back in court on 9 January 2014.
Sars’ bizarre decision in Shauwn Mpisane case
Tender queen’s company given a tax-clearance certificate by taxman despite state charges of tax fraud Shauwn Mpisane, Durban’s tender queen, has won a major battle to keep her business empire intact. She’s been awarded tax clearance by the SA Revenue Service (Sars). Mpisane is due back in court on Wednesday on tax fraud charges – charges brought against her by Sars. City Press can reveal that Mpisane’s Zikhulise Cleaning, Maintenance and Transport was awarded tax clearance on September 20, despite the court case, after repeated applications were refused by Sars officials in Durban. The clearance, which City Press has seen, is valid for a year. It states that Mpisane is in “good standing” with Sars and had not, as at that date, contravened the Income Tax Act or the Value Added Tax Act.
Employment Tax Bill is signed into law
The long-awaited Employment Tax Incentive Bill, to create jobs and provide relevant skills for young, unemployed South Africans has been signed into law. Employers will receive a tax incentive to employ young workers in special economic zones for a maximum of two years, under certain conditions. The law takes effect on January 1. Employers will be able to claim the incentive on a sliding scale for any employee between 18 and 29 who was hired on or after October 1 this year and is receiving a monthly salary that is above the relevant minimum wage and less than R6000 a month.
Deductibility of empowerment costs
The costs associated with black economic empowerment transactions are akin to obtaining a licence to operate; on this basis, these costs should form part of the income earning operations of the company.(1) The Income Tax Act(2) contains various provisions relating to deductibility of specific expenditure, some of which have been identified as possibilities for the deduction of expenditure relating to indirect black economic empowerment measures, such as:
Proposed amendments to the foreign dividend exemption
By Toinette Beckert South African resident companies (and individuals) are required to include in their gross income any amount received or accrued by way of a foreign dividend, as defined. A “foreign dividend” is defined in section 1 of the Income Tax Act, 58 of 1962 (the “Act”) as including, inter alia, any amount that is paid or payable by a foreign company in respect of a share in that foreign company where that amount is treated as a dividend or similar payment by that foreign company for the purposes of the laws relating to –
The taxation of employer-provided low cost housing: A step in the right direction, but not yet a leap for mankind…
Introduction As part of Government’s anti-poverty objectives, Government is seeking to provide low-income South African’s with low cost housing and more specifically, ownership of residential property. In this regard, Government appears to be supportive of employers who provide low cost housing to low-income employees with the aim of enabling these employees with the opportunity to acquire ownership of the housing.
Income Tax Deductions v Value-Added Tax Deductions
Broadly speaking, in their ordinary business operations, certain entities are entitled to claim certain deductions for income tax and value-added tax (“VAT”) purposes. In this article we discuss the tests used by South African courts and in practice, for income tax and VAT purposes, in order to determine whether a taxpayer will be entitled to such deductions. Consideration will be given specifically to the deduction of legal expenses incurred by a taxpayer in terms of section 11(c) of the Income Tax Act No. 58 of 1962 (“Income Tax Act”) and the deduction of input tax in respect thereof in terms of section 1 read with section 7 of the Value-Added Tax Act No. 89 of 1991 (the “VAT Act”).