The main purpose of this study is to analyse the South African VAT implications for offshore investment via the CIS industry in the absence of detailed place of supply rules; more specifically, where the fees charged, in respect of services rendered to manage these funds, are consumed. This is accomplished by analysing the South African VAT legislation in order to determine whether it succeeds in providing certainty regarding the place of supply of offshore investments, and whether there is a VAT on imported services exposure in the CIS industry. This analysis highlights the problems associated with the limited place of supply rules in South Africa. Furthermore, this study also includes an analysis to establish whether place of supply rules exist in certain developed countries, with regard to offshore portfolio management services. These findings are compared to determine whether similar rules can be implemented in South Africa. Some foreign countries, like New Zealand, Canada and the member states of the European Union, do cater for specific place of supply rules and this is the reason for their selection. This study concludes that the place of supply rules identified in the South African VAT legislation are not sufficient to determine whether offshore portfolio management services are deemed to take place (consumed) in South Africa, and accordingly be subject to VAT in South Africa. The study further concludes that the place of supply rules recommended in the International VAT/GST Guidelines issued by the Organisation for Economic Cooperation and Development (OECD) and place of supply rules established in certain member states2 of the European Union indicate that portfolio management services should be taxed where the consumer is located. Should South Africa implement place of supply rules based on the European legislation and guidelines issued by the OECD, the problems associated with the absence of place of supply rules in South Africa can be resolved. This will ensure no competitive advantage gained for foreign or domestic service providers of portfolio management services.

Bad debt deductions and doubtful debt allowances provide relief to taxpayers who would be subject to income tax on amounts accrued to them which may never be received. No definition of a bad or doubtful debt is provided in the Income Tax Act. This dissertation considered current legislation, historical court cases, academic writing and the views expressed by SARS through explanatory memoranda and directives in order to establish when a debt becomes bad or doubtful and the extent of the relief granted. This dissertation also considered the future of the doubtful debt allowance in light of the change of accounting standards from IAS 39 to IFRS 9. There are no specific requirements for a debt to become bad or doubtful. Whether a debt is bad is a factual question taking into account all relevant facts. Whether a debt is doubtful and the extent of the allowance granted is determined by the Commissioner, but that determination must be reasonable. The Commissioner relies on IAS 39 rules of impairment as the starting point for determination of a doubtful debt allowance. IFRS 9 determines impairment in a significantly different manner to IAS 39, abandoning the requirement that a “loss event” must have occurred. Adoption of IFRS 9 will result in a change to the determination of doubtful debt allowances, for example, by reducing the generally accepted rate of 25% of identified doubtful debts or by requiring the taxpayer to compile a list of debts which would have qualified as doubtful under IAS 39.

The objective of this thesis was to analyse the effect of the increasing popularity of global e-commerce on the South African legislative framework in respect of the taxation of non-resident enterprises, and to propose a possible solution for the taxation of e-commerce, taking into account previous theories. The methodology utilised comprised of a critical analysis of the legal rules relating to the taxation of a foreign entity's business profits by virtue of the application of the permanent establishment principle, its definition and evolution as a conceptual basis for taxation. Furthermore, an in depth evaluation of the various solutions that have already been proposed and, in some cases, implemented was undertaken. It was concluded that the application of the permanent establishment principle is wholly ineffective as a means to levy tax on the e-commerce business profits of a foreign entity as the principle relies too heavily upon a physical intermediary in the source state, whereas e-commerce transactions are conducted on the intangible trading platform of the Internet. In light of the numerous policy proposals advanced over the years, it was concluded that the most feasible and practical solution for the taxation of foreign e-commerce would be the imposition on a foreign entity in South Africa of a low withholding tax on the active business profits in excess of a pre-determined threshold. Key words: South African taxation; e-commerce; foreign business entity; permanent establishment; withholding tax