Law

Steinkopf women feel they are better placed than men to take up leadership positions at local level. Matilda Smith reports that they have identified local government priorities and are strategising to ensure women's participation in local government

Abstract: The internet has changed the way we do business by dispensing with the physical requirement of being in the country where the business is being conducted. As the principles of tax law are based on the traditional business model, suggestions have been made for the ...

Abstract: The recent 2007 tax case ITC 1819 (2007) 69 SATC 159 is noteworthy on two grounds. First, it is one of only a few South African tax cases dealing with the application and interpretation of double taxation agreements (DTAs), in this instance an agreement ...

Abstract: The internet has changed the way we do business by dispensing with the physical requirement of being in the country where the business is being conducted. As the principles of tax law are based on the traditional business model, suggestions have been made for the ...

Abstract: The recent 2007 tax case ITC 1819 (2007) 69 SATC 159 is noteworthy on two grounds. First, it is one of only a few South African tax cases dealing with the application and interpretation of double taxation agreements (DTAs), in this instance an agreement ...

Despite treaties for the relief of double taxation (‘tax treaties’) being incorporated into the Income Tax Act by section 108(2), the Income Tax Act does not provide certainty on whether the Act or the treaty prevails where the two interact or conflict. Likewise, South African courts have not decisively ruled on which of the two prevail. This interaction between the Income Tax Act and a tax treaty has found its way into two recent cases— Commissioner for the South African Revenue Service v Tradehold Ltd and Commissioner for the South African Revenue Service v Van Kets. In the former, the court, in an obiter statement, mentioned that ‘... a double taxation agreement thus modifies the domestic law and will apply in preference to the domestic law to the extent that there is any conflict’ while in the latter the court indicated that ‘... the provisions of the DTA [double taxation agreement] and the Act, should, if at all possible, be reconciled and read as one coherent whole’.

The cessation of the publication of the annual Meyerowitz on Income Tax by David Meyerowitz resulted in a gap in the availability of an introductory text to tax law. While there are very good and useful texts on tax law for the tax lecturer, student and practitioner to use, none of them fits quite comfortably in a bag or briefcase. These texts are not portable, being either too large or spanning a few loose-leaf volumes. Secondly, these texts tend to provide the detail and complexity of tax law which are not always suitable as an introductory text. It is this gap for an updated tax law text book that is suitable for use as introductory text or as a first port of call which Tax Law: An Introduction seeks to fill. The sort of book that is required must be an updated text which provides a basic overview and, at the same time, is portable and can fit into a briefcase!

The approach to locating the 'place of effective management' as the test for the tax residency of a company in the South African context has yet to be determined, simply because the phrase is not defined in the Income Tax Act and its interpretation in the context of a company has not come before a South African court.

In 2013, the Income Tax Act was amended to ensure that taxpayers would not escape the 'exit tax'. This 'tax' is imposed when South African residents cease to be tax resident in South Africa and become tax resident in a country with which South Africa has entered into a treaty for the relief of double taxation. The amendment came about as a result of the decision in Commissioner for the South African Revenue Service v Tradehold Ltd. Although the amendment purportedly nullifies the decision in Tradehold with respect to the application of the 'exit tax', the judgment of the Supreme Court of Appeal is of interest in relation to its stance on the proviso to the definition of 'residence' in the Income Tax Act. The dispute in Tradehold arose as a result of the insertion of the proviso to the definition of 'residence' in the Income Tax Act. The proviso was added to the definition of 'residence' in the Income Tax Act in 2003 to deal with the pr...

The recent 2007 tax case ITC 1819 (2007) 69 SATC 159 is noteworthy on two grounds. First, it is one of only a few South African tax cases dealing with the application and interpretation of double taxation agreements (DTAs), in this instance an agreement concluded between Lesotho and South Africa. Secondly, it highlights two crucial issues in such cases, namely the importance of determining the correct tax-paying entity and the interaction between DTAs and domestic tax legislation.

The introduction of the headquarter company structure in the South African Income Tax Act as a means to allow South Africa to be used as a regional gateway, requires a comparison with other resident South African companies involved in intra-African trade and investment. It also requires a comparison with non-resident companies using South Africa purely as a management base for their intra-African trade and investment. The comparison must take into account the effect of the structure on the income flows, the transfer of funds, the administrative burden, and collectively, the effect on the tax liabilities of the various company structures. In addition the tax policy concepts of neutrality and the South African constitutional requirement of 'equality' should be considered. Taken collectively, the analysis illustrates that the headquarter company structure as provided for in the tax legislation, does not meet the objective of the use of South Africa as the gateway into Africa. N...

The role of intellectual property ownership structures in both exchange control and tax avoidance, as a method of extracting money flows from a country and locating income in a low-tax jurisdiction, is continuously under scrutiny by the authorities. In recent years, intellectual property, as a component of intangibles, has attracted the attention of tax authorities as one of the tools used in tax-avoidance schemes. Internationally, the Organisation for Economic Co-operation and Development (OECD) has published discussion documents on base erosion and profit shifting, with one of the main issues being the transfer pricing aspects of intangibles. The lead by the OECD has been followed in South Africa by the appointment of the Davis Tax Committee. In particular, multinational enterprises and their global business structuring have been identified as using intellectual property ownership structures as one of the tools to avoid or reduce the payment of tax in certain jurisdictions. These ...