TaxTalk Articles

Amendments to CFC diversionary income rules


Revised diversionary income rules related to Section 9D.


Transfer pricing auditing processes by their nature often take years to finalise and therefore relying solely on transfer pricing leaves the South African tax base vulnerable to profit shifting.”


On July 22 2015, National Treasury released for comment the Draft Taxation Laws Amendment Bill, 2015 (DTLAB 2015), the Draft Tax Administration Laws Amendment Bill, 2015 (DTALAB 2015), and related Explanatory Memoranda.


Tax considerations of debit loans


A closer look at the introduction of Dividend Witholding taxes and its impact on debit loans


If the interest applied to the debit loan were higher than the official rate of interest, then there is no benefit to the employee.


It is certainly the sign of the times that we as practitioners are seeing a significant increase in the number of debit loan accounts present on the balance sheets of our small to medium sized clients. The tax law with respect to these loans changed with effect from 1 April 2012 with the introduction of Dividend...

Africa spotlight: 15 by 2015?


Many African countries have begun to adopt transfer pricing regimes based on the OECD Guidelines and the UN Practical Manual, but raw materials and a narrow domestic tax base still dictate the priorities of many African jurisdictions.


As Africa is largely categorised as consisting of low income and developing countries, the regional tax landscape presents a number of domestic factors which muddy the waters for local revenue authorities to apply comprehensive transfer pricing regimes as suggested by the BEPS action plan.”

Taxation of dividends payable by a South African company to a Cypriot shareholder


SARS may now impose a dividends tax on dividends paid by a South African company to a Cypriot shareholder as provided for in the Protocol to the current agreement for the avoidance of double taxation between South Africa and Cyprus.


“SARS has published on its website that “the person liable for the tax … remains ultimately responsible to pay the tax should the withholding agent fail to or withhold the incorrect tax”. Presumably it can be inferred therefrom that any penalties and interest levied for non-payment or late payment of dividends...

Fiscal incentives for the modern-day Flintstones: a note on energy efficiency


An outline of the new energy efficiency tax incentive, namely section 12L of the Income Tax Act No. 58 of 1962, as amended.


“The implementation of an EE measure implies that a reduction in the use of fossil fuels, like coal and diesel, will qualify for a section 12L deduction. Projects such as lighting, insulation of certain buildings on the premises and an upgrade of air conditioning systems could potentially qualify for section 12L.”


In the popular 1960s TV series, the Flintstones were a Stone Age family whose technology consisted...

Buying back shares from shareholders: dividends tax liability


A look at when liability to pay dividends tax will arise in the buying back of shares from shareholders


 “The liability for dividends tax only arises on the day on which each instalment payment of the dividend is actually paid, or when each instalment of the dividend payment becomes due and payable, whichever comes first.”


Many issues arise when a company enters into an agreement to buy-back shares from its shareholders. If a company enters into an agreement with a particular shareholder to buy-back a certain number...

The R&D tax incentive – issues and recommendations


This article is an adaptation of a speech given at a recent session held by the Minister of Science and Technology discussing the R&D Tax Incentive.


“It is encouraging to see that when discussing the incentive with our successful clients, it appears that when they eventually do receive the benefits what they are able to do with them match the goals of the incentive.”


We often hear of people criticizing our government, but the R&D Tax Incentive is an example of our government implementing a far-sighted policy in line with...

Observations of the South African grants and tax incentives landscape


Grants and incentives are part of the national policy framework that supports productive investment.


“Throughout the world governments attempt to promote investment into certain priority areas or to address systematic or structural weaknesses in specific sectors of an economy by offering grants and tax incentives.”


In order for an economy to achieve optimum economic growth it is important to foster an investment climate supporting sustainable investment by providing certainty to private investors within a coordinated national policy...

The tax consequences of cancelling a contract


When considering the tax consequences of cancelling a contract, it should be determined whether the contract was cancelled in the same year of assessment or if that contract was cancelled in the subsequent year of assessment.


When a contract is entered into and cancelled in the same year of assessment, certain adjustment rules are applied with the intention of effectively putting the taxpayers in a neutral tax position, as if they never entered into the transaction.”