Author: Heinrich Louw (CliffeDekkerHofmeyr) Following the release on 12 September 2012 of a proposed framework for the regulation of hedge funds, the National Treasury and the Financial Services Board released draft regulations (Draft Regulations), together with an explanatory memorandum (Memorandum), on 16 April 2014.
Category: International Tax
UK Court decision on corporate tax residency
Author: Justin Liebenberg (CliffeDekkerHofmeyr) A company incorporated outside South Africa can be tax resident here if its place of effective management (POEM) is located in South Africa. POEM is also often used as the tie-breaker to finally determine corporate tax residency under double tax agreements. A recent court decision in the UK sheds further light on POEM especially in the context of a double tax agreement.
Nowhere to hide – Convention is to increase the co-operation amongst tax authorities around the world
By Dr Beric Croome of ENSafrica On 21 February 2014 the Convention on Mutual Administrative Assistance in Tax Matters, (‘the Convention’) as amended, by the provisions of the Protocol amending the Convention on Mutual Administrative Assistance in Tax Matters which entered into force on 1 June 2011 was published in the Government Gazette.
International Tax – US Foreign Account Tax Compliance Act (FATCA)
This article discusses how the US Foreign Account Tax Compliance Act (FATCA) is likely to affect all of us and contends that FATCA is not only of concern for United States (US) taxpayers; it is already affecting United Kingdom (UK) residents and its reach will soon extend to other taxpayers. Non-compliant taxpayers are watching a short fuse burning and that the records of the world’s financial industry will be opened to unprecedented data mining. FATCA has made waves in the upper reaches of the funds industry and caused concern to banks, custodians, insurance companies and trustees, but little news regarding its impact has yet spread to the wider world. Few ultimate clients of the international finance industry have yet heard of it.
Registration requirements for foreign suppliers of electronic services clarified
Author: Gerhard Badenhorst of ENSafrica The VAT legislation has been amended with effect from 1 April 2014 to give effect to government’s proposal that all foreign suppliers of electronic services in South Africa are required to register for VAT in South Africa. The legislation amendment places an obligation on foreign suppliers to register for VAT in South Africa if they make supplies of electronic services in excess of R50 000 in a 12 month period to South African customers who are either tax resident in South Africa, or where payment for the services by such customers originates from South African banking accounts.
Global standard on exchange of tax information will help fight against tax evasion
A new global standard on the exchange of tax information intended to raise the bar on international cooperation will make it easier for the authorities to track down tax cheaters and fight tax evasion, says PwC. But the new standard also raises questions around privacy and cost implications, in particular for developing countries in Africa. The Organisation for Economic Cooperation and Development (OECD) recently announced plans for a global common reporting standard for the automatic exchange of information between the tax authorities.
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.
International taxation controversy: the coming storm
Author: Cym H. Lowell and William Zhang There is a revolution underway in the world of international taxation. The current essential treaty and substantive taxation rules were developed shortly after the end of World War I using England and India—denominated “imperial” and “colony” countries, respectively—as a model. The purpose of these treaty and substantive rules was to repatriate income from the colony country to the imperial country to facilitate repayment of war debts. As a result, the model treaties that formed the basis of the current Organisation for Economic Co-operation and Development (OECD) and United Nations models essentially allowed source countries to tax only a limited share of the overall (combined) income, and allocated the residual income to the “residence” country (England, or the imperial country).
Ruling on the definition of 'listed shares' for purposes of the foreign dividend exemption
Author: Heinrich Louw (Cliff Dekker Hofmeyer) The South African Revenue Service (SARS) released Binding Class Ruling No 42 on 7 February 2014. The factual circumstances in respect of which the ruling was made are as follow: Company Y is a company incorporated and resident in foreign country Y. Company X is a company incorporated and resident in country X. Company X is also a wholly-owned subsidiary of Company Y. Company X is to be listed on the JSE Limited. Its business is investment in foreign debt instruments, on which it will receive interest returns.
Tax Administration Act – Criminal investigation in relation to a serious tax offence
The Tax Administration Act, No. 28 of 2011 (the TAA) took effect on 1 October 2012. In light of SARS’s strong emphasis on compliance, this article considers the procedures SARS should follow where it believes that a serious tax offence might have been committed. A “serious tax offence” is defined as “a tax offence for which a person may be liable on conviction to imprisonment for a period exceeding two years without the option of a fine or to a fine exceeding the equivalent amount of a fine under the Adjustment of Fines Act, 1991 (Act No. 101 of 1991).”