Cape Town – President Jacob Zuma on Wednesday announced the removal of Finance Minister Nhlanhla Nene from the Finance portfolio in Cabinet. “I have decided to remove Mr Nhlanhla Nene as Minister of Finance, ahead of his deployment to another strategic position,” Zuma said in a statement. Zuma said that Nene had done well since his appointment as Minister of Finance during a difficult economic climate. Zuma has appointed ANC member of parliament, David Van Rooyen, as the new Minister of Finance. Van Rooyen served as the Whip of the Standing Committee on Finance and as Whip of the Economic Transformation Cluster. He was also a former executive mayor of Merafong Municipality and a former North West provincial chairperson of the South African Local Government Association. “The new deployment of Mr Nene will be announced in due course,” Zuma said.
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Proposed extension of existing prescription periods (section 99 of the Tax Administration Act)
Author: Mareli Treurnicht. Section 99 of the Tax Administration Act, No 28 of 2011 (TAA) prescribes the period of limitations (ie prescription) for the issuance of assessments. Section 99 currently states that the South African Revenue Service (SARS) may not make an assessment in terms of Chapter 8 of the TAA, inter alia: three years after the date of assessment of an original assessment by SARS; (in the case of self-assessment for which a return is required) five years after the date of assessment of an original assessment by way of self-assessment by the taxpayer or, if no return is received, by SARS; or (in the case of a self-assessment for which no return is required) after the expiration of five years from either the date of the last payment of the tax for the tax period or the effective date, if no payment was made in respect of the Read More …
Draft Carbon Tax Bill published for comment
Author: Mansoor Parker and Andrew Gilder (ENSafrica) On Monday, 2 November 2015, the South African National Treasury published a Draft Carbon Tax Bill (the “Bill”) for public comment, with the comment period commencing immediately and continuing until 15 December 2015. At first glance, the Bill does not stray too far from the carbon tax design that Treasury has been proposing since 2010 in various discussion papers, national budget speeches and their associated explanatory memoranda and responses to stakeholder commentary on the design. The Bill does not change the essentials, but it does progress certain of the detail while providing only a tantalising glimpse of some of the more interesting aspects of the design. While the proposed tax is vaunted as the carbon tax, this is not the only or the first carbon tax imposed in South Africa. Emissions on new vehicles are subject to emissions taxation and approximately five years Read More …
Assuming contingent liabilities in acquiring a going concern
By Erich Bell, Senior Tax Consultant at BDO South Africa. SARS issued a draft interpretation note (DIN) in September 2015 on the tax implications of the assumption of contingent liabilities where a business is sold as a going concern. This article sheds some light on the assumption of contingent liabilities which specifically formed part of the purchase price relating to the acquisition of the business as a going concern.1 A purchaser can settle the purchase price for the acquisition of a business as a going concern by employing a combination of: cash consideration, assuming the seller’s debts, assuming the seller’s contingent liabilities, loan funding, or share issues.
Large business tax strategy behaviour – a UK research study
On 22 July 2015, Her Majesty’s Revenue and Customs (HMRC – the United Kingdom’s counterpart to SARS) published a 35-page consultation document containing the results of research undertaken by a well-known London-based research organisation, entitled Exploring Large Business Tax Strategy Behaviour The study set out to gain an understanding of how large businesses develop and adjust their tax strategies. HMRC regards such knowledge as key to its effectiveness in improving compliance. Overall aim of the research
Market value of shares on valuation date
Author: Heinrich Louw An interesting judgment was handed down in the Supreme Court of Appeal (SCA) on 30 September 2015 in the case of Commissioner for the South Africa Revenue Service v Stepney Investments (Pty) Ltd. The matter concerned the determination of the valuation date value of certain shares for purposes of calculating the capital gain or loss that arose upon their disposal Stepney Investments (Pty) Ltd (Taxpayer) owned certain shares in Emanzini Leisure Resorts (Pty) Ltd (Company). The Company was mainly involved in the casino, hotel and leisure sector. At the relevant time the Company was awarded a casino licence for a period of 15 years in respect of a particular area and intended to establish a casino at a particular site. Unfortunately the Company became involved in a litigious dispute with a third party in respect of the development of the casino on the preferred premises, causing a Read More …
Proposed amendments to the Tax Administration Act No. 28 of 2011 in relation to legal privilege
Authors: Robert Gad and Megan McCormack (ENSafrica) The draft Tax Administration Laws Amendment Bill of 2015 (“TALAB”), published for public comment on 22 July 2015, proposes the introduction of a new section 42A into the Tax Administration Act No. 28 of 2011 (“TAA”), dealing with the procedures to be followed where legal professional privilege (“Privilege”) is asserted by a taxpayer. These procedures are particularly onerous on the taxpayer and may result in undue delays in the tax dispute resolution process, particularly in relation to discovery proceedings.
Proposed repeal of the VAT zero rating under the National Housing Programme
In terms of section 11(2)(s) of the Value Added Tax Act No. 89 of 1991 (the “VAT Act”), payment made to vendors in respect of services supplied to a public authority or municipality, under a National Housing Programme, is subject to VAT at the rate of zero percent. In the Explanatory Memorandum to the draft Taxation Law Amendment Bill of 2015 (the “Draft Bill”), it is proposed that, due to administrative complexities relating to the implementation of section 11(2)(s) of the VAT Act, the zero rating provision will be abolished with effect from 1 April 2017.
South Africa has one of the broadest VAT bases on financial services, but is there room for the net to be widened?
Aurthur: Ferdie Schneider, National Head of Tax, BDO South Africa Valued-Added Tax (VAT) systems theoretically extend their bases as wide as possible to minimise economic distortionary effects so as to impact as little as possible on consumer choices. However, certain supplies of services still escape the VAT net, often due to their ‘difficult to tax’ nature. These typically include financial services. South Africa has one of the broadest (or most inclusive) VAT bases in the more than 160 jurisdictions that have VAT systems. Many VAT systems apply a broad brush approach when exempting financial services. Significantly, VAT systems often exempt ‘pure’ financial services and although intermediation or facilitation services could technically be taxed under a VAT system, these also often escape the VAT net as well.
Are Wealth taxes a likely probability for South Africa?
The Davis Tax Committee (DTC) consideration that a wealth tax for South Africans is not the universal solution to South Africa’s revenue needs. This is the view of Rhodes Business School Professor and DTC member Matthew Lester who was speaking at a BDO South Africa event last week. Professor Lester dissected the current taxation system within the country commenting on what is working, what isn’t and what changes need to be implemented for the future economic growth of the country.