Most Read Contributor in South Africa, September 2016
The South African Revenue Service ("SARS") has
published a public notice ("the Notice") setting out
reportable arrangements and excluded arrangements for purposes of
sections 35(2) and 36(4) of the Tax Administration Act 28 of 2011
("TAA"). The Notice was released and became effective on
3 February 2016, replacing all notices previously issued under
sections 35(2) and 36(4) of the TAA.
The Notice is substantially similar to the public notice
previously issued under sections 35(2) and 36(4) of the TAA on 16
March 2015; however, we note the following differences:
an exclusion has been added to an
arrangement listed as reportable if it would qualify as a
"hybrid equity instrument" for purposes of section 8E of
the Income Tax Act 58 of 1962 ("the Act"), where
instruments are listed on an exchange regulated in terms of the
Financial Markets Act 19 of 2012;
an arrangement that would have
constituted a "hybrid debt instrument" for purposes of
section 8F of the Act, if the prescribed period had been 10 years,
is no longer considered to be reportable;
an additional reportable arrangement
has been included in respect of the rendering of consultancy,
construction, engineering, installation, logistical, managerial,
supervisory, technical or training services to a resident or a
non-resident with a permanent establishment in South Africa, in
terms of which a non-resident who is not an employee, agent or
representative of that person was, is or will be in South Africa in
connection with, or for purposes of, rendering those services, and
the expenditure incurred, or to be incurred, after 3 February 2016
exceeds, or is anticipated to exceed, R10-million in aggregate and
does not qualify as remuneration for purposes of the Fourth
Schedule to the Act; and
an arrangement referred to in section 35(1)(c) of the TAA will
constitute an excluded arrangement in terms of section 36(4) of the
TAA if the tax benefit that is, or will be, derived, or is assumed
to be derived, from that arrangement is not the main, or one of the
main, benefits of that arrangement.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The expansion of the West African regional market to foreign investors, and the search for emerging markets has led to a continuous increase in business mobility and cross border investments with Nigeria.
Effective collaboration amongst government agencies, automation of processes and capacity building by tax authorities have always been identified by stakeholders as strategies for achieving an efficient tax system.
The major objective of the waiver is to promote voluntary compliance and consequently generate revenue for government which otherwise, could have been lost.
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