Author: Amanda Visser (BDlive) Businesses globally are facing a period of great uncertainty following the publication of seven action plans that countries will be implementing in the next year to address the shifting of profits by multinationals in efforts to reduce their tax liabilities and depriving countries of much needed revenue. Jeffrey Owens, former head of the Organisation of Economic Co-operation and Development (OECD) Centre for Tax Policy and Administration, anticipated a “tsunami” of tax disputes between multinationals and tax authorities because there was certainly going to be inconsistencies in the application of the steps announced this week.
Category: International Tax
OECD releases 2014 BEPS deliverables
Author: Osler Hoskin & Harcourt LLP , Canada, Global On September 16, 2014, the Organisation for Economic Co-operation and Development (OECD) released its first seven of 15 deliverables under the OECD/G20 base erosion and profit shifting (BEPS) project (the 2014 BEPS Package). The 2014 BEPS Package arises from the Action Plan on Base Erosion and Profit Shifting (the BEPS Action Plan), which contains 15 specific recommendations for international tax reform (see our Update on the BEPS Action Plan, “OECD/G20 International Tax Reform: Potential Impact on Canadian Companies,” July 19, 2013). A summary overview of the 15 recommendations is included at the end of this Update.
Collection and exchange of tax related information by tax authorities
Tax authorities across the globe are working aggressively to collect taxes which they believe are collectable in their respective jurisdictions. States are entering into bilateral and multilateral agreements aimed at assisting each other in the collection of information and taxes. South Africa has actively taken part and in some respects been a regional leader in issues relating to the gathering of information and sharing thereof with other states to
Contentious international corporate restructuring ruling
Author: Andrew Lewis (Cliffe Dekker Hofmeyr) The corporate tax rollover relief provisions contained in section 41 to section 47 of the Income Tax Act, No 58 of 1962 (Act) were recently expanded to cater for international corporate restructurings. The South African Revenue Service (SARS) released Binding Private Ruling 178 (BPR 178) on 14 August 2014 where the applicant sought clarity on the tax consequences of an international corporate restructuring in terms of section 42 (asset-for-share transactions) and s45 (intra-group transactions).
The implications of FATCA in South Africa
Background The Foreign Account Tax Compliance Act (FATCA) was enacted in 2010 by the US to target non-compliance by US taxpayers using foreign accounts. FATCA essentially requires foreign financial institutions to report information about financial accounts held by US taxpayers, or by foreign entities in which such taxpayers hold a substantial ownership interest, to the IRS. Until now, FATCA has largely impacted US taxpayers with specified foreign financial assets.
Important Notice: 60 Day Time Limit Placed on Section 6quin Rebate
It has come to our attention that there are still taxpayers who are unaware of the fact that they have to notify SARS within 60 days (from the date the foreign tax was withheld) if they intend to use the section 6quin rebate for foreign withholding taxes paid. The Taxation Laws Amendment Act No. 24 of 2011 (TLAA) introduced subsection (3A) to section 6quin of the Income Tax Act in January 2012.
Challenges for corporate taxpayers and the role of advisors
Author: Pieter van der Zwan (North-West University) Being a corporate taxpayer in an environment with constant developments in legislation and regulations coupled with complex tax issues that arise on a regular basis is not an easy task. One need not look further than a number of cases that appeared before the courts over the past year to see evidence of this. It is submitted that the nature of the challenges faced highlights the fact that the role of a corporate tax advisor’s involvement in the tax affairs of a client has evolved to be much more than merely assisting to complete an income tax or provisional tax return just before the submission deadline arrives. This article deals with four of the challenges that a corporate taxpayer in South Africa may face as well as the role that a corporate tax advisor could, and arguably should, be fulfilling in addressing these Read More …
VAT – Importation of goods
The requirements for claiming VAT when importing goods to South Africa have always been contentious and the affected VAT vendors are often unsure about the documentary evidence they need to retain to survive a SARS VAT audit. Even SARS offices interpret or enforce the provisions of the VAT Act differently. For example, some allow the clearing agent’s invoice as proof of import and others accept payment to the clearing agent as proof that VAT has been paid. Even the timing for claiming the input tax deduction has been disputed. These uncertainties have resulted in many VAT vendors receiving significant assessments, penalties and interest charges from SARS.
Tax confidentiality versus exchange of tax information
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.
South Africa leading the pack towards global information exchange
On 9 June 2014, the South African Revenue Service (SARS) announced that South Africa and the United States (US) had entered into an inter-governmental agreement (IGA) which facilitates the implementation of the US Foreign Account Tax Compliance Act (FATCA), and signifies an important step in South Africa’s journey in a global movement towards the automatic exchange of information for tax purposes. The so-called “Model 1A” agreement has not yet been ratified by Parliament. However, Public Notices confirming its implementation have been gazetted.