Notable Tax Law updates covering South African case law, legislation, SARS and global tax developments.
Case Law
SARS TC ITC 24918 (IT) [2021] (Johannesburg) (18 March 2021)
ABC Trust had additional assessments raised by the Commissioner assessing CGT, understatement penalties and interest. The trustees of ABC objected the assessments, and these objections were dismissed by the Commissioner. ABC appealed these dismissals on the basis that they were merely a conduit or pipeline that allowed proceeds from other trusts to flow to their beneficiaries and the CGT ought to be incurred by the beneficiaries of the trust (which was agreed by both parties to have been paid). This is due to the fact that the proceeds of sales of various assets do not vest in the trustees of ABC. It was therefore ruled that ABC Trust was not liable to pay CGT and therefore the appeal was upheld.
CSARS v Levi Strauss SA (Pty) Ltd (509/2019)
SARS took a decision by the Gauteng High Court on appeal to the SCA. The decision disallowed SARS origins and transaction value determinations of the respondent Levi SA ("Levi's") product. Levi's conducted some of their operations by purchasing clothing products from South African Development Community ("SADC") members, namely Madagascar and Mauritius. They would purchase clothing and had supply agreements with SADC members under the auspices of a company based in Hong Kong (Levi APD). They would then sell those goods on to the SA based company at a marked-up price. Royalties and commissions were paid to Levi APD for their 'agent' services. SARS believe that such royalties and commissions should be included in determining the Transactional Value of the clothing items for taxation purposes. The SCA determined that Levi LPD was not acting as an agent for Levi SA. They further determined that royalties and commissions were to be included in the transactional values. The full judgement can be accessed here.
South African Revenue Services Developments
Corporate Income Tax (CIT): Audit Letters to Specify Due Dates
From 23 April 2021, all CIT audit letters will not specify a specific due date for all outstanding and required documents such as supplementary declarations,corrections or any relevant material. Failure to submit these documents may result in withholding CIT refunds. The full statement can be accessed here.
South African Revenue Services Developments
SARS participates in World Customs Organisation (WCO) Customs Integrity Perception Survey (CIPS)
SARS and WCO encourages stakeholders and colleagues to participate in a very valuable Customs and Excise Integrity survey. This is in line with other countries around the world who are also conducting their own surveys. The objective of this is to ensure that integrity is a core value of Customs and Excise, which will ensure South African Revenue authorities are respected across the world. The survey can be accessed here.
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