TaxTalk Articles

A South African perspective on resolving dual residence disputes


Expect little sympathy from tax authorities when dual residence is claimed due to lack of economic substance


“Under the new test, the destiny of a company’s taxation jurisdiction is in government’s hands with the outcome dependent solely upon discretionary negotiation.”


Multinational companies may find they are simultaneously resident in  two countries under the domestic laws of each of the countries. Modern tax treaties contain tie-breaker rules to determine dual residence in these circumstances. The tie-breaker rule is essentially...

New rules for international cooperation on taxpayer’s affairs


Greater transparency will expose undeclared offshore accounts 


“The bottom line of the reporting standard is: ‘I will show you mine if you will show me yours.’”


Globalisation has dramatically increased cross-border financial activities.This necessitated enhanced co-operation and understanding between tax authorities to curb tax evasion and to ensure a fair allocation of taxes among the jurisdictions in which the activities take place.


The Organisation for Economic Co-operation and Development (OECD)...

7 Talking Points from the Tax and Good Governance in Africa conference

The Tax and Good Governance in Africa conference focussed on the crucial steps to minimise the illicit financial flows out of Sub-Saharan Africa


“Taxation fortifies the social contract by increasing the level of accountability that citizens demand from leaders.”


The Institute for Austrian and International Tax Law at the Vienna University of Economics and Business (WU) organized the first high-level conference on Tax and Good Governance in Africa as a segment of the Tax and Good Governance Project.


The event, held in...

Proposals to improve the VAT Act


Shortcomings in VAT legislation and how they can be overcome


“The term ‘reasonable grounds’ appears to be interpreted differently by different SARS offices.”


Each year National Treasury provides an opportunity to taxpayers, tax practitioners and members of the public to actively participate in the process of effecting legislative changes. They are invited to submit technical proposals for possible inclusion in Annexure C of the 2016 Budget Review. This is a critical process and firms such as KPMG are actively involved in the process...

The Tax Risks of Cross-Border Employment


The issues relating to the international hiring out of labour, personal tax considerations and what to look out for when structuring contractual arrangements.


From a South African personal income tax perspective, residents are liable for tax on their worldwide income and capital gains (subject to certain exclusions), while non-residents only have tax liability on their South African sourced income.”


The world has become increasingly globalised, and cross-border mobilisation is high on the agenda for many countries...

SARS is stemming the flow of outbound service fees


The increase in non-goods transactions have not gone unnoticed. SARS has new tools to monitor this.


“Service fees are defined as fees for services of a technical, managerial and consulting nature and will be regarded as being from a South African source when the services are rendered in South Africa.”


A key priority for the Davis Tax Committee, appointed by former Finance Minister Pravin Gordhan in 2013, was to formulate South Africa’s response to Base Erosions and Profit Shifting (BEPS).


Among the myriad of issues...

Tax-free conversions of hedge funds: not so simple?


Converting hedge funds into collective investment schemes may face tax consequences.


“The character of hedge fund securities has remained  a vexing tax question for many years.  The question is how to classify the nature of these instruments under South African judicial principles when no authorities specifically exist on point.”


For those who are unfamiliar with the world of exotic financial instruments, a hedge fund is a pooled security investment vehicle administered by a professional investment management firm. In South Africa,...

Powering up: A look at section 12B allowance for renewable energy machinery


With the right fiscal incentives, South Africa could become a leader in renewable energy production


“As the intention of the legislature was to incentivise the industry by in expanding the section 12B allowance in 2006 to assets used in the production of renewable energy, it was likely intended that the allowance should be extended to assets that also harness electricity.”


South Africa has an abundance of natural resources, with some of the best wind and solar conditions around the globe. The design of suitable fiscal incentives for...

Customs and excise legislation gets much needed overhaul


New legislation will affect customs systems, processes and policies.


“The new legislation will change the treatment of the movement of goods within the Southern African Customs Union (SACU), the oldest customs union in the world.”


International conventions, best practice, globalisation, and technology hav assisted in giving the South African customs legislative framework a make-over. This resulted in changes to systems, processes and policies affecting importers and service providers. The current Customs and Excise Act 91 of 1964 is...

Draft Carbon Tax Bill – legalese meets science speak


What the carbon tax is and how it will affect you


“The Draft Bill is riddled with formulae.  It looks as if the formulae are aimed at establishing the tax base with reference to the reporting obligations imposed by NAEIS.”


The Draft Carbon Tax Bill (the “Draft Bill”) proposes a pollution tax, known as a carbon tax, which is set to come into operation on 1 January 2017. Carbon tax will be imposed on persons who conduct various activities in the manufacturing, construction, mining and transport sectors. This tax will come into effect...