THE renegotiated double-taxation agreement between South Africa and Mauritius should not be a concern to any group that has structured its affairs properly, says Werksman tax head Ernest Mazansky. His comments come as South Africa has renegotiated its double-taxation agreement with Mauritius following earlier concerns by the South African Revenue Service (SARS) and the Treasury that South African multinationals were abusing the current treaty, negotiated in 1996.
Category: International Tax
Shuttleworth takes Reserve Bank to court
Pretoria – Billionaire IT entrepreneur and the first South African in space, Mark Shuttleworth, has turned to the Pretoria High Court in a bid to recover the 10 percent exit levy (more than R250 million) imposed on him by the South African Reserve Bank when he transferred more than R2 billion out of the country. His legal team, headed by Gilbert Marcus SC, on Monday asked Judge Francis Legodi to set aside the decision by the Reserve Bank that he had to pay this amount – and he wants to be refunded.
Year in Review – 2012 Tax Developments in South Africa
During 2012 a number of significant amendments were made to the tax legislation in South Africa. This report provides a brief description of certain of these amendments which may be of interest to foreign companies that conduct business in South Africa as well as those seeking investment opportunities in South Africa.
South Africa introduces a withholding tax on interest
Currently South Africa does not impose a withholding tax in respect of interest paid to any offshore investors. However as from 1 July 2013, the Income Tax Act (58 of 1962) will impose a new withholding tax on interest paid by a resident person to or for the benefit of any foreign person.
Sale of shares in a foreign company
South African residents are taxed on their worldwide income. Accordingly, a capital gain arising from the sale of shares in a foreign company will be subject to South African tax unless an exemption applies or a double tax agreement provides otherwise.
SARS and your bank account
On 29 February 2012, the South African Revenue Service (SARS) issued a notice in Government Gazette No 35090 (Notice No 173) relating to the liability of certain institutions, most notably banks, to furnish SARS with financial information about taxpayers. The notice was issued in terms of s69 of the Income Tax Act, No 58 of 1962, which section has been superseded by s26 of the Tax Administration Act, No 28 of 2011 (TAA).
South African tax case considers application of capital gains treaty exemption to deemed disposition
A recent decision of the Supreme Court of Appeal of South Africa considered the application of the capital gains article in a double tax convention based on the OECD model to a deemed disposition of property occurring as a result of an “exit tax” imposed on an emigrating corporation. As the Court’s decision concerns capital gains exemption language that is similar to that used in most double tax treaties based on the OECD Model, it provides a helpful glimpse into how such provisions may be interpreted in other jurisdictions, including Canada.