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CorporateTransfer pricing a critical issue for African tax administrationsFriday, January 10, 2014 14:51:41
The African Tax Administration Forum has identified transfer pricing as a critical issue for African tax administrations and has undertaken several initiatives to improve co-operation between the administrations to police transfer pricing. In South Africa, the South African Revenue Service (SARS) has also significantly increased its focus on transfer pricing and regularly undertakes transfer pricing audits with a very capable transfer pricing team. SARS applies the Organisation for Economic Co-operation and Development (OECD) Guidelines on Transfer Pricing to determine the appropriate transfer pricing policy for a multinational enterprise operating in South Africa.
CorporateImage Rights: It’s Time for Clarity and CertaintyMonday, November 25, 2013 15:53:00
The tax treatment of image rights is contentious in many countries, South Africa included. Lionel Messi the hero of Spanish football, recently paid €5m to the tax authorities after he had been charged with tax evasion in respect of the sale of the commercial rights to use his image, autograph and name ( “image rights”). The charges arose from the income from the sale of Messi’s image rights to offshore companies. The perceived value of image rights was also rumoured to be an important aspect of the talks surrounding Gareth Bale’s record breaking transfer from Tottenham Hotspur FC to Real Madrid. In the UK it has been reported that several football clubs in the Premier League have settled disputes with HM Revenue and Customs (*HMRC) regarding the taxation of image rights.
CorporateThe new double tax agreement between South Africa and Mauritius - What is the effect on business?Monday, October 14, 2013 10:17:00
The news of the revised double tax agreement between South Africa and Mauritius (“the new DTA”) on Monday, 27 May, rang alarm bells for both Mauritian companies investing into South Africa as well as for South African companies expanding offshore via Mauritius. What are these changes and how will they impact on the use of Mauritian companies for investment by non-residents into South Africa, or for foreign investment by South Africans?
CorporateEuromoney Tax Handbook 2013Thursday, September 26, 2013 09:52:00How is South Africa responding to growing concerns about base erosion?
South Africa, influenced by international tax developments, has proposed new measures that seek to address perceived base erosion problems, whilst at the same time it tries to position itself as a 'Gateway to Africa'. From a tax policy perspective, base erosion becomes a concern for national tax authorities when gaps in the interaction of different tax systems, or the application of bilateral tax treaties, allow for income from cross-border activities to result in either non-taxation or unduly low taxation. The term 'base erosion' includes tax evasion, tax avoidance, tax underestimation and population flight.
CorporateTax considerations for oil, gas and mining companies in AfricaTuesday, July 16, 2013 14:26:55
Africa is rich in mineral resources, offering substantial opportunities in mining, oil and gas. Potential investors in these sectors have shown an interest in using South Africa as a gateway for investing into Africa, one of the reasons being South Africa’s good tax treaty network with other African countries, as well as major European and Asian countries.
CorporateSouth Africa as a base for expansion into Africa?Wednesday, June 19, 2013 11:02:00
Africa is the cradle of humanity yet it is only now, in the early years of the twenty-first century, that it is truly taking its place amongst the economic community of nations. With 60% of the world's uncultivated arable land, 1 billion people and abundant natural resources, Africa is rich in opportunities and potential. Currently home to seven out of ten of the world’s fastest growing economies, this exciting continent’s outlook is promising. The International Monetary Fund (IMF) predicts that no other continent will compete in growth in the near future and, with 70% of its population under the age of 35, Africa will enjoy extraordinary demographic dividend as their energy and talents drive economic growth and development.
CorporateSARS appointment of retirement funds as tax agents creates dilemmaWednesday, March 06, 2013 17:35:00
The appointment of retirement funds by the South African Revenue Service (SARS) as tax agents is creating a dilemma for funds trying to balance their fiduciary responsibilities towards members with the obligation of being appointed as a tax agent. Johan Kotze, Head of Tax Dispute Resolution at leading pan-African legal services group Bowman Gilfillan explained: “Many retirement funds are currently receiving tax agency appointment letters from SARS requesting funds to deduct outstanding tax from members’ pension, and to pay it over to SARS”. Johan Esterhuizen, Partner in the Pension Practice Group at Bowman Gilfillan, noted that appointments create a dilemma because the fund, the administrator and the trustees have to balance their fiduciary responsibilities towards the member with the obligation of being appointed as a tax agent.”
CorporateTaxpayers Beware – Tax Administration Act DeadlinesThursday, December 06, 2012 12:24:00
The more things change, the more they stay the same? In the case of the Tax Administration Act No 28 of 2011 (“the TAA”) the answer is both “Yes” and “No”. And a taxpayer would be well advised to rather go and check the details, before assuming that what used to apply would still apply. For example, taxpayers and their advisers have become accustomed to how the prescribed number of days should be counted when submitting an objection to an assessment. However, it is important to take note of how this has changed:
CorporateWhat is the basic structure of the mining royalty regime in South Africa?Wednesday, August 08, 2012 09:56:00
In South Africa the liability to pay mining royalties arises when mineral resources which have been extracted from within the Republic, are transferred. The 'transfer' of the mineral resources is the trigger for the imposition of the royalty. 'Transfer' is defined as the disposal of a mineral resource, or the consumption, theft, destruction, or loss of a mineral resource (other than by way of flaring or other liberation into the atmosphere during exploration or production) if that mineral resource has not previously been disposed of, consumed, stolen, destroyed or lost. Because mineral resources are often temporarily exported for refining, the temporary export of mineral resources is not regarded as a transfer.
CorporateNew proposals for hybrid equity instruments and third party-backed shares Tuesday, July 31, 2012 10:31:00
When the Draft Taxation Laws Amendment Bill of 2011 was released on 3 June, it contained proposed amendments to section 8E of the Income Tax Act and a proposal to introduce section 8EA into the Act. One of the proposed amendments was intended to increase the redemption period central to the application of section 8E from three to 10 years. If the proposal became law, it would have meant that in order to avoid the application of section 8E, an investor would have had to hold a share for at least 10 years and a day before redemption, which usually would not be feasible. Another proposal relating to section 8E was intended to extend the application of section 8E to foreign dividends, with the consequence that both domestic and foreign dividends received or accrued in respect of a hybrid equity instrument would be deemed to be interest in relation to their recipient.
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