Author: Lisa Brunton (Senior Associate at Cleffe Dekker Hofmeyr). By now, we’re all familiar with the term, Automatic Exchange of Information (AEOI), otherwise referred to as ‘routine exchange’, but do we really appreciate what it means? From a South African fiscal perspective, AEOI involves the systematic and periodic transmission of taxpayer information by the source jurisdiction to the residence jurisdiction. This may also include instances where tax residence is based on differing criteria (eg domicile in the United Kingdom (UK); citizenship in the United States of America (USA)) or where an entity or person has tax obligations in several jurisdictions.
Author: Nyasha Musviba
Overruled: SARS expresses an interesting view on an amalgamation transaction
The South African Revenue Service (SARS) has traditionally adopted a conservative approach in issuing rulings which approve a tenuous interpretation of provisions of the Income Tax Act, No 58 of 1962 (Act), in favour of the taxpayer. However, in Binding Private Ruling 231 (Ruling), which was issued by SARS on 10 May 2016, SARS adopted an interesting interpretation of the corporate roll-over relief provisions in s44 of the Act, which raises a number of questions. The Ruling is quite long and therefore we will only discuss the manner in which SARS applied the provisions of s44, relating to corporate roll-over relief in the case of so-called amalgamation transactions (s44 transaction).
Set-off of customs debt against amounts refundable
Author: Petr Erasmus (Director at Cleffe Dekker Hofmeyr). South African Revenue Service (SARS): Customs (Customs) sets off amounts owed to Customs against amounts refundable to clients. Section 76C of the Customs and Excise Act, No 91 of 1964 (Act) provides for set-off as follows: “Set-off of refund against amounts owing – Where any refund of duty is in terms of this Act due to any person who has failed to pay any amount of tax,
Criticism on SARS’s approach to the interpretation of legislation
Author: Mareli Treurnicht (Senior Associate at Cliffe Dekker Hofmeyr). On 29 April 2016 the High Court of South Africa (Gauteng Division, Pretoria) handed down judgment in an application brought by Julius Malema (Applicant) against the Commissioner for the South African Revenue Service (SARS). The matter concerned a compromise agreement concluded between them in terms of s205 of the Tax Administration Act, No 28 of 2011 (TAA).
An uncompromising stance – the dispute between SARS and Julius Malema continues
The High Court (Gauteng Division, Pretoria) recently handed down judgment in the case of Malema v Commissioner for the South African Revenue Service (76306/2015) [2016] ZAGPPHC 263 (29 April 2016). The issue before the court was whether the South African Revenue Service (SARS) was bound to a compromise agreement entered into between the Malema (Applicant) and SARS as a result of alleged non-disclosures and misstatements made by the Applicant, who expressly warranted the truth of the facts furnished by him. The compromise agreement was concluded in accordance with the provisions of s205 of the Tax Administration Act, No 28 of 2011 (TAA).
The evolution of the “foreign partnership” definition in South Africa
Author: Refilwe Mashale (Tax Consultant at ENSAfrica). In South Africa, the determination of whether a foreign entity is a company or partnership is an important one, as it subsequently determines the applicable tax treatment of the foreign entity. The issue of whether foreign entities should be recognised as foreign companies or foreign partnerships in South Africa was recently brought into the spotlight once again by the Taxation Laws Amendment Act No. 25 of 2015 (the “2015 Amendment Act”).
Extension of the period to submit an objection: what constitutes exceptional circumstances?
Author: Chris de Bruyn(Candidate attorney at ENSAfrica). In the matter of ABC (Pty) Ltd v Commissioner for the South African Revenue Service (ITC 0038/2015) (“ABC case”), the Tax Court had to consider whether the taxpayer discharged the onus to prove that “exceptional circumstances” existed for an extension of the period allowed for the taxpayer to object to an assessment, in terms of section 104 of the Tax Administration Act, 28 of 2011 (“TAA”).
Africa tax in brief – April 2016
Author: Celia Becker (ENSAfrica). BOTSWANA: Protocol to treaty between Botswana and Sweden enters into force The amending protocol to the Botswana/Sweden Income Tax Treaty (1992), which was signed on 20 February 2013, entered into force on 1 December 2015. The protocol generally applies from 1 December 2015 for the provisions on exchange of information and from 1 January 2016 for the remaining provisions.
SARS ruling on a share subscription transaction followed by a share
Author: Mansoor Parker (Tax Executive at ENSAfrica). On 17 March 2016, the South African Revenue Service (“SARS”) issued an interesting binding private ruling (“BPR 227”) concerning a share subscription transaction which was followed by two share buyback transactions. BPR 227 deals with an area that National Treasury and SARS have identified as a problem, namely where a shareholder disposes of its shares through means of a share buyback as opposed to selling the shares outright to a third party. Before dealing with BPR 227 we will explain the background to this issue, the steps taken by National Treasury and SARS to deal with this issue and why BPR 227 was treated differently.
Draft regulations for the implementation of Country-by-Country reporting published in South Africa
Author: Arnaaz Camay (Tax Executive at ENSAfrica). The South African Revenue Service (“SARS”) is, in accordance with section 3(2)(j) of the Tax Administration Act, 28 of 2011 (the “TAA”), responsible for giving effect to the Country-by-Country Reporting Standard for Multinational Enterprises (the “CbC Reporting Standard”) which was developed under the Organisation for Economic Co-operation and Development’s (“OECD’s“) base erosion and profit shifting (“BEPS”) Action Plan 13 – “Re-examine Transfer Pricing Documentation”. The OECD’s recommendation under Action Plan 13 was that all countries should adopt a standardised approach to transfer pricing documentation which follows a three-tiered structure consisting of a master file, a local file, and country-by-country (“CbC”) report.