TaxTalk Articles

In Conversation with Michael Katz

Michael Katz, the Chairman of ENSafrica, recalls the background and achievements of the Katz Commission which commenced 22 years ago, he also provides us with insight into some of the current tax policy concerns facing South Africa.


“. . .my view that redistribution is best achieved, not so much on the revenue side of the budget (i.e. tax collections) but, on the expenditure side of the budget.” 


Q: Please take us back to the context and landscape when the Katz Commission took place?


A: It...

Managing Permanent Establishment Risk Efficiently


A brief overview of the written and unwitten rules governing Permanent Establishment and advice on how to navigate PE risk.


“As a rule of thumb, increased visibility may increase the likelihood of tax audit, where the existence of a PE may be asserted.” 


Permanent Establishment (“PE”) risk management is one of the critical inputs for operating models to remain sustainable and effective in a foreign market.  Once an enterprise establishes a PE in a foreign country, a portion of its business is segregated and effectively treated as...

SARS Will Find Out What You Did in Your Tax Return


Thanks to a number of information sharing agreements between SARS and other entities, SARS has the ability to competently identify fraudulent tax returns.


Banks report a considerable number of suspicious refunds to SARS on a daily basis and SARS confirms that in a high percentage of these cases, the refund was paid due to fraudulent or inflated expense claims.”


George Orwell could have had SARS in mind when he said:


“Always eyes watching you and the voice enveloping you. Asleep or awake, indoors or...

Tax Confidentiality – A Relic from a Bygone Era


An in-depth look at how the emphasis in the tax world has changed from “tax confidentiality” to “tax transparency.


The Internet provides easy access to, and presents an almost running-commentary on, what’s going down in tax havens around the globe.”


"It's the End of the World as We Know It (And I Feel Fine)" featured on the 1987 album Document by the rock band R.E.M. The song was inspired by Bob Dylan's "Subterranean Homesick Blues". [Real pedigree stuff... unfortunately, it gives away...

The State of Tax in South Africa

“. . the tax department is being drawn out of its traditional silo and into the broader business.”


Nazrien Kader, Partner and National Taxation Services leader at Deloitte


Q: With economic growth in South Africa proving elusive, are you concerned that there is a trend towards aggressive revenue collection that could possibly harm businesses?


A: I think it very much depends on how revenue authorities and business conduct themselves in this environment – which incidentally,...

6 Factors Start-Ups Should Consider


Starting a company involves climbing a bureaucratic mountain. We look at six issues entrepreneurs need to consider.


Many small to medium sized businesses have enjoyed the special dispensation for qualifying small business corporations.  By meeting this definition, the corporation is entitled to favourable tax tables, and accelerated capital allowances.


1. Registering a company


After reserving a name with the Registrar of Companies, the founding documents must be registered with the Companies and...

Carbon Tax’ Effect on the Iron and Steel Industry


A look at the effect that the looming Carbon Tax would have on the already struggling iron and steel industry.


“…unlike most other taxes, theoretically the main purpose of Carbon Tax is not revenue generation, but rather government intervention to create a mechanism to facilitate positive change.”


Society is negatively affected by pollution, yet the polluter is often not held accountable.  In such instances, it is the duty of government to intervene by way of regulations.  Carbon Tax, which is set to come into effect on 1 January...

Failure, More Failure and Some Success: GAAR Ten Years On


The much needed “new” General Anti Avoidance Rule is ten years old. In this two part series, we look at the successes of the law.


It is now clear that the Commissioner may apply the GAAR as an alternative or additional basis for an assessment and that it may be applied to steps in or parts or parts of a larger avoidance arrangement.”


Judging the new GAAR ten years on


The new General Anti Avoidance Rule (GAAR), sections 80A to 80L of the Income Tax Act (ITA), was enacted on 6...

The Future of Trusts


Although revenue authorities place an ever increasing focus on the role of trusts, they remain an essential wealth planning and management structure. 


From a South African and off-shore perspective, there is no doubt that investment in a hard currency such as the US dollar or the Euro, makes perfect sense when trying to ensure diversification of a portfolio investment.


Whenever you write an article which has the heading, “The future of….” - the inference that can be made is that the future in question appears to be threatened. In...

The Right Incentive


Incentive schemes are an often used tool used by governments to encourage growth. A recent survey took a closer look at how African countries are using this tool.


Whether a country should offer incentives or not to investors (both local and foreign), is often a debate hotly argued within government circles, and of course in affected business circles. 


Global trend towards regionalism


In the current global economic downturn, protectionism on both a local and regional level is expected to...

E-Commerce and Tax: Playing Catch-Up


As our world becomes increasingly digitalised, tax regulators find themselves in a seemingly never ending chase to regulate the expanding e-commerce frontier. 


The world has undergone an electronic and digitisation revolution over the past 10-20 years, and development in this regard is faster than ever. As the global economy speeds towards digitisation, many traditional industries are being left behind. The Organisation for Economic Cooperation and Development (OECD) has now caught up (well almost) with regard to VAT systems, albeit that many...

Foreign Tax Affairs


An overview of how cross border movement of employees creates tax risks.


With a volatile and agile global business landscape, comes an equally volatile and agile tax risk landscape.


The increased global focus by organisations on ensuring growth in their international footprint, especially within Africa, necessitates the cross-border movement of employees. This poses increased tax risks for the global organisation, risks that require effective and pro-active management as a significant portion of these tax risks are related to...

The Tax Implications of Currency Gains made on Foreign Investments


Investing offshore. Beware: the amount of capital gains tax that you need to pay will differ greatly depending on the what type of investment structure you make use of.


The converse would however also be true: taxpayers who have to apply the simple method are likely to be at a disadvantage when the ZAR appreciates.


The current economic conditions in South Africa have led many to invest in non-South African Rand (ZAR) denominated instruments. Many of these instruments provide investors with exposure to investment growth opportunities...

The Legal and Tax Consequences of Emigration


Synopsis of a presentation given at the sixth Annual Conference of the Fiduciary Institute of Southern Africa (FISA)


Any person who is considering leaving South Africa permanently should carefully take into account the tax implications of ceasing to be a tax resident here as well as the further consequences of such a departure should he/she formally emigrate for exchange control purposes.  Emigration for tax purposes could have immediate tax consequences with a possible liability for tax. This liability is often missed, which could result in...

Taxing Executive Share Incentives: The Rules Need to Change


Recent and proposed tax amendments have undesirable and unintended consequences not only for executive compensation, but also for employee share ownership schemes.


 “… the biggest losers from these amendments will be participants in broad-based BEE trusts.”


Share schemes have traditionally been designed as a long-term incentive intended to bolster employee retention and reward.  Such incentives, however, typically make up a far larger portion of potential executive pay as compared with rank and file employees. Usually on the basis...

Recent Developments in the South African Carbon Tax Legal Regime


ENSafrica’s carbon markets and tax specialists unpack the looming Carbon Tax Bill, including determining the volume of greenhouse gas emissions as stipulated in the Draft Bill.


Treasury has demonstrated a willingness to introduce flexibility into the system and accommodate industry’s concerns that mechanisms need to be introduced that permit a reduction of liability.”


The Draft Carbon Tax Bill (“the Draft Bill”) anticipates that carbon tax will be implemented on 1 January 2017. Since the Draft Bill’s publication in...

Just How Taxing Does The Balance Sheet Need to Be?


Although starting a business is always a rocky road, ignoring your business’ tax affairs during the early days has the potential to wreck an enterprise before it has reached full speed.


The remaining challenge is whether those who own the business as well as those with the power to shape the environment will put the business first.


Small businesses are the backbone of most modern economies. Despite often being overshadowed by their giant counterparts - large multinationals and listed companies - they remain a key driving force...