Category: International Tax

Transfer Pricing – Income Tax Act 58 of 1962 Section 31 further analysis

Nyasha Musviba

The provisions of Section 31 of the Income Tax Act No. 58 1962 (the Act) have been revised. Section 31 was introduced in 1995 to grant the Commissioner power to adjust tax calculations where a taxpayer was involved in cross-border transactions not at arm’s length. The old section 31 provided that the Commissioner could adjust the consideration in respect of the transaction to reflect an arm’s length price for the goods or services. This meant that taxpayers were not obliged to make the adjustments on their tax returns for transactions even if such transactions were not conducted on an arm’s length basis. Taxpayers could therefore file tax returns with excessive deductions, and then sit and wait and hope for the best – which would be that the Commissioner did not pick up these excessive deductions.

Residency Status Of a Non-Resident Who Applies For a Temporary Residence Permit

Nyasha Musviba

Author: PwC Now that South Africa has a residence-based system of income tax, a decision by a non-resident to become tax-resident in South Africa has the result that his world-wide income will become subject to tax in South Africa, save to the extent that relief is given by a double-tax agreement or that unilateral relief is available in terms of section 6 quat of the Income Tax Act 58 of 1962. It is therefore not a decision to be taken lightly.

SA Shines In Global Tax Rankings

Nyasha Musviba

South Africa is one of only 18 countries that comply fully with international standards on the transparency and exchange of taxpayers information, the Treasury said in a statement on Wednesday. The exchange of tax information on request refers to when one tax authority seeks financial information from its counterpart. It relates to both individual and corporate taxpayers, according to the Global Forum on Transparency and Exchange of Information for Tax Purposes.South Africa outperformed countries like the United Kingdom, United States, Qatar and Mauritius.

‘Unemotional data’ Show SA’s Tax Rate Compares Well With World Average

Nyasha Musviba

Author: Amanda Visser (BusinessDay) South Africa has improved its ranking in the ease of paying taxes for a typical small and medium-sized company from 32nd to 24th, a position it last held in 2011, mainly due to the success of the electronic filing system for individuals and companies and the reduction in the total tax rate. South Africa’s total tax rate of 30% compares favourably with the world average of 43% and Africa’s 52.9%, placing it in the 53rd position out of 189 economies that were measured in the Paying Taxes 2014 report released by the World Bank and professional services firm PwC.

International Tax – Mutual Assistance between South Africa and UK DTA

Nyasha Musviba

In the recent case of Ben Nevis (Holdings) Limited & Metlika Trading Limited v The Commissioners for HMRC (Her Majesty’s Revenue and Customs) [2013] EWCA, the Court of Appeal of England and Wales considered the interpretation of the mutual assistance provisions in the double tax agreement (DTA) between the United Kingdom (UK) and South Africa (SA).

Binding Ruling – BPR 143 – Headquarter company

Nyasha Musviba

Binding Private Ruling 143, dated 2 May 2013, issued in terms of section 76Q of the Income Tax Act No. 58 of 1962 (the Act), deals with whether certain preference shares held by the applicant (a public company incorporated and resident in South Africa) qualify as equity shares in the context of the definition of headquarter company in section 1 of the Act.

Shuttleworth V The South African Reserve Bank

Nyasha Musviba

Author: Alastair Morphet (CliffeDekkerHofmeyr) Mr Shuttleworth famously sold his shares in Thawte, which earned him a substantial amount of money. He subsequently decided to emigrate from the Republic and to transfer all of his remaining assets out of the country. The South African Reserve Bank imposed a 10% levy on his South African assets as a condition for permission under the Exchange Control Regulations to transfer his assets out of the country. He subsequently approached the North Gauteng High Court to set aside the decision of the Reserve Bank to impose the 10% levy.