The term ‘beneficial ownership’ is included in numerous tax treaties that are concluded between countries today but the majority of these treaties do not define the term. The purpose of this study is four fold. Firstly, to investigate what the meaning is of the term ‘beneficial owner’ for tax treaty purposes? Secondly, what factors should be taken into account to determine the beneficial owner, if any? Thirdly, what the meaning of the term ‘beneficial ownership’ is in the context of those tax treaties where the term has been incorporated, and lastly, if the term ‘beneficial owner’ should have a domestic law, international tax or tax treaty meaning? The study was conducted by reviewing various articles, opinions, court cases and government publications, that deals with the issues raised in the preceding paragraph, and then to identify if there are answers to these questions that were raised? The study concludes that there is no concrete on-line definition for the term “beneficial owner” and that various factors need to be considered in support of the term. The Chinese revenue authority has recently issued various circulars, setting out various factors that need to be considered in an attempt to identify the beneficial owner. Equally important is the factors that need to be considered as set out in the ‘Limitation on Benefits’ clause that appears in most US tax treaties. The study also concludes that the findings of the Court in the Indofood International Finance Ltd v JP Morgan Chase Bank NA regarding the fact that the term ‘beneficial owner’ should have an international fiscal meaning is appropriate. Although there are counter arguments supporting the fact that an domestic tax law meaning pertaining to the specific taxes should prevail over any other meaning or that the term should be interpreted in a purely treaty framework, and not be referenced to domestic law, where there is a well established international law meaning for the term, an international fiscal meaning will result in a more consistent interpretation between Contracting States and limit misinterpretation due to differences in tax and legal systems. AFRIKAANS : Die term ‘voordelige eienaar’ is ingesluit in menige belasting ooreenkomste wat tussen lande gesluit word vandag, maar die meerderheid van hierdie ooreenkomste, definieer nie die term ‘voordelige eienaar’ in die ooreenkoms nie. Die doel van hierdie studie is vier voudig. Eerstens, om vas te stel wat die betekenis van die term ‘voordelige eienaar’ vir belasting ooreenkoms doeleindis is. Tweedens, watter faktore inaggeneem moet word in die vasstelling van die betokens van die term ‘voordelige eienaar’, indien enige. Derdens, wat die betekenis van die term ‘voordelige eienaar’ is in die belasting ooreenkomste waar die term reeds geïnkorporeer is en laastens, of die term ‘voordelige eienaar’ ‘n nasionale, internasionale of belasting ooreenkoms betekenis moet hê. Die studie is uitgevoer deur artikels, opinies, hofsake en regering’s publikasies te hersien, wat met die vrae wat in die vorige paragraaf aangespreeks is handel, en om dan te identifiseer of daar antwoorde is op die vrae wat geopper is? In die die studie wat gedoen is is gevind dat daar tans geen vaste een-lyn definisie is vir die term ‘voordelige eienaar’ nie, en dat menigde faktore inaggeneem moet word ter ondersteuning van die term. Die Chinese Belastingowerheid het onlangs menigde Omskrywings uitgereik wat menigde fatore uiteensit wat oorweeg moet word in ‘n poging om die voordelige eienaar te identifiseer. Ewe belangrik is die faktore wat oorweeg moet word soos uiteengesit in die ‘beperking op voordele’ klousule wat in meeste Verenigde State van Amerika belasting ooreenkomste voorkom. Die studie het ook gevind dat die bevinding deur die Hof in die “Indofood International Finance Ltd v JP Morgan Chase Bank NA” saak rakende die feit dat die term ‘voordelige eienaar’ ‘n internasionale fiskale betekenis moet he toepaslik is. Alhoewel teen argumente ter ondersteuning is van die feit dat ‘n nasionale belasting wetgewing betekenis rakende die spesifieke belasting voorkeer moet kry bo enige ander mening van die term ‘voordelige eienaar’ of dat die term uitsluitlik in ‘n belasting ooreenkoms hoedanigheid geïntreperteer moet word, en nie moet verwys na nasional wetgewing waar daar reeds ‘n goed gevestigde internasionale wetgewing betekenis vir die term is nie, sal ‘n internasionale fiskale betekenis ‘n meer konsekwente interpretasie tussen Kontrakterende State tot gevolg hê en die verkeerde interpretasie as gevolg van verskille in belasting sisteme en wetgewing voorkom. / Dissertation (MCom)--University of Pretoria, 2010. / Taxation / unrestricted

Thesis (MComm) -- Stellenbosch University, 2011. / ENGLISH ABSTRACT: The study’s focus is to provide an analysis of the development of the definition of royalties in the context of Model Tax Conventions (‘MTC’). The secondary focus of the study is to analyse the evolution of the concept of beneficial ownership as a limitation to the application of the treaty benefits contained in royalty provisions of the MTC’s. In terms of the focus of the study, it is concluded that the most significant developments with regards to the definition of royalties, since originating in the League of Nations Model Convention’s first Draft Model in 1928, occurred during the final Committee meetings held in Mexico and London (producing the Mexico and London Draft Models respectively) and in terms of the Organisation for European Economic Cooperation (‘OEEC’), which set out the founding principles of the definition. It is also concluded that the later MTC’s did not significantly change the Treaty royalty definition but added clarification as to the meaning of the term by way of the Commentaries to the MTC. The secondary focus of the study concludes that the term has not really changed since it was first used in an international context. The most recent case law on the matter confirmed that the attributes of the concept is that of ownership and that the matter is one which needs to be decided from a legalistic perspective and should not be based on the economic interpretation of the term ‘beneficial ownership’, which could effectively turn the concept into a broad anti-avoidance provision. / AFRIKAANSE OPSOMMING: geen opsomming

L'innovation financière tire avantage de la déconnexion entre forme juridique et substance économique. Les contrats financiers sur actions permettent de répliquer synthétiquement les attributs économiques de la propriété des actions sans organiser le transfert des droits sur la chose. Tandis que le droit des sociétés reconnaît le principe d'autonomie juridique des contrats financiers à l'égard des actions sous-jacentes en attribuant les droits politiques et pécuniaires de l'associé aux seuls titulaires de la propriété juridique des titres financiers, les principes directeurs du droit boursier conduisent à y faire exception face aux perturbations engendrées par ces techniques de dissociation de la forme juridique et de la substance économique. Affichant son pragmatisme, le régulateur boursier saisit la complexité de cette réalité dérivée pour appréhender, au-delà des catégories juridiques formelles, la substance économique des opérations réalisées. Le droit boursier adopte une approche substantielle de l'avoir et du pouvoir au sein des sociétés par actions, pour déterminer notamment l'application des régimes de déclaration des prises de participations significatives et d'offre publique obligatoire. Apparaissent alors les contours d'une méthode raisonnée de régulation de l'innovation financière en droit des sociétés cotées. La démarche que nous proposons opère tant ex ante sur le plan normatif qu'ex post au stade de la sanction. Elle suppose une réflexion d'ensemble sur l'élaboration de la norme en droit des sociétés cotées et les conditions de son application par le régulateur boursier. dans sa double fonction normative et contentieuse. / The dissociation of legal form and economic substance is one of the main drivers of financial innovation. Equity derivatives allow parties to replicate the economic substance of share ownership without transferring the legal title itself. Whereas corporate law acknowledges the autonomy of the financial contract with respect to the underlying shares by granting voting and dividend rights to their sole legal owner, core principles of securities regulation are challenged by transactions taking advantage of the dissociation between form and substance. Taking a pragmatic stance, the regulator addresses the complexity of this derivative reality by grasping the economic substance of such transactions beyond their mere legal form. Recent developments in the major shareholding notification regime and the mandatory tender offer rule indicate an increasing focus on the substance of beneficial ownership and voting power in listed companies. From this evolution emerge the contours of a regulatory approach aiming to tackle the specific issues raised by financial innovation. The approach we advocate operates both ex ante at the normative stage and ex post at the enforcement stage of the regulatory process. It is an invitation to rethink the determinants of securities regulation as well as the role of the securities regulator in the exercise of its dual power to establish norms and to impose sanctions.

This work entails a study of some of the schemes that are employed by country residents when companies and trusts are used as vehicles for investing in offshore tax-haven and low tax jurisdictions so as to avoid taxes. The study also entails a critical analysis of the effectiveness of the some of the laws in South Africa that curb such offshore tax avoidance schemes. Similar laws in the United Kingdom and in the United States are analysed in order to come up with some recommendations that could be considered for possible reform of the relevant South African laws where they are found wanting. Since offshore tax avoidance is an international issue, the effectiveness of the recommendations of some international organisations in preventing the depletion of countries' tax bases are also analysed. / JURISPRUDENCE / LLD

This work entails a study of some of the schemes that are employed by country residents when companies and trusts are used as vehicles for investing in offshore tax-haven and low tax jurisdictions so as to avoid taxes. The study also entails a critical analysis of the effectiveness of the some of the laws in South Africa that curb such offshore tax avoidance schemes. Similar laws in the United Kingdom and in the United States are analysed in order to come up with some recommendations that could be considered for possible reform of the relevant South African laws where they are found wanting. Since offshore tax avoidance is an international issue, the effectiveness of the recommendations of some international organisations in preventing the depletion of countries' tax bases are also analysed. / JURISPRUDENCE / LLD