Text in Afrikaans / Hierdie verhandeling handel oor die belastingimplikasies wat uit die aankoop en verkoop van ondernemings in Suid-Afrika voortspruit. Aandag word gegee aan die bree belastingraamwerk van die transaksie en die verskillende maniere waarop 'n onderneming aangekoop of verkoop kan word. Vervolgens word die belastingimplikasies met betrekking tot die aankoop en die verkoop van 'n onderneming bespreek, deur die twee maniere waarop 1 n onderneming oorgeneem kan word, naamlik bateverkryging en belangverkryging, te ontleed. Belastingbeplanningsaspekte wat vir die koper en die verkoper van 'n onderneming van belang is, word ook geidentifiseer. 'n Metode word daarna ontwikkel om die belastingimplikasies te kwantifiseer sodat die belastingimplikasies deur die koper en die verkoper geevalueer kan word. Die gevolgtrekking word gemaak dat 'n koper en verkoper van 'n onderneming groot belastingvoordele kan bewerkstellig deur die transaksie deeglik te beplan en noukeurig deur middel van 'n koopkontrak te struktureer. / This dissertation deals with the tax implications arising from the purchase and sale of enterprises in South Africa. Attention is given to the broad tax framework of the transaction and the different manners in which an enterprise can be purchased or sold. Next, the tax implications in relation to the purchase and sale of an enterprise are discussed by analysing the two manners in which an enterprise can be acquired, namely asset acquisition and share acquisition. Tax planning aspects of importance to the buyer and seller of an enterprise are also identified. Thereafter, a method is developed to quantify the tax implications in order that they can be evaluated by the buyer and seller. The conclusion is made that a buyer and seller of an enterprise can secure major tax benefits by planning the transaction properly and by structuring it carefully by means of a contract of sale. / Financial Accounting / M.Com. (Accounting)

Text in Afrikaans / Hierdie verhandeling handel oor die belastingimplikasies wat uit die aankoop en verkoop van ondernemings in Suid-Afrika voortspruit. Aandag word gegee aan die bree belastingraamwerk van die transaksie en die verskillende maniere waarop 'n onderneming aangekoop of verkoop kan word. Vervolgens word die belastingimplikasies met betrekking tot die aankoop en die verkoop van 'n onderneming bespreek, deur die twee maniere waarop 1 n onderneming oorgeneem kan word, naamlik bateverkryging en belangverkryging, te ontleed. Belastingbeplanningsaspekte wat vir die koper en die verkoper van 'n onderneming van belang is, word ook geidentifiseer. 'n Metode word daarna ontwikkel om die belastingimplikasies te kwantifiseer sodat die belastingimplikasies deur die koper en die verkoper geevalueer kan word. Die gevolgtrekking word gemaak dat 'n koper en verkoper van 'n onderneming groot belastingvoordele kan bewerkstellig deur die transaksie deeglik te beplan en noukeurig deur middel van 'n koopkontrak te struktureer. / This dissertation deals with the tax implications arising from the purchase and sale of enterprises in South Africa. Attention is given to the broad tax framework of the transaction and the different manners in which an enterprise can be purchased or sold. Next, the tax implications in relation to the purchase and sale of an enterprise are discussed by analysing the two manners in which an enterprise can be acquired, namely asset acquisition and share acquisition. Tax planning aspects of importance to the buyer and seller of an enterprise are also identified. Thereafter, a method is developed to quantify the tax implications in order that they can be evaluated by the buyer and seller. The conclusion is made that a buyer and seller of an enterprise can secure major tax benefits by planning the transaction properly and by structuring it carefully by means of a contract of sale. / Financial Accounting / M.Com. (Accounting)

Tax avoidance through interest deductions has been highlighted internationally as a concern with the effect of eroding tax revenues of countries, including South Africa (SA). The evident cause of this concern is what is termed base erosion and profit shifting (BEPS) mainly orchestrated by multinational companies using aggressive tax planning schemes. Although the concern continues to exist, comprehensive measures are in place in SA such as the anti-avoidance rules and exchange control regulations to mitigate the concern. The study was undertaken to analyse the legislation on interest deductions in terms of the Income Tax Act No 58 of 1962 (‘the Act’) with particular focus on anti-avoidance. A number of issues pertaining to the operation of the provisions in the Act; administrative challenges as well the possible exploitation of loopholes within the provisions were identified. Furthermore, a comparative analysis conducted against Australia and the United Kingdom indicated that the measures adopted in SA are relatively similar, if not ahead. The effect the anti-avoidance measures have on the economic growth was considered. The results were positive in that the measures do not counteract the pursuit of economic growth. Lastly, the study assessed the position of SA against the internationally recommended best practice on the subject matter and it became evident that opportunities exist to improve the current measures applied in SA to mitigate the BEPS risks through interest deductions.

Tax evasion and avoidance costs South Africa billions of rand each year. This treatise examines the judiciary’s view and/or attitude to the dividing line between legitimate and illegitimate tax avoidance. It seeks to find out how South African courts have ultimately dealt with the old GAAR section 103(1). The treatise seeks to establish the role that the judiciary plays in tax avoidance and whether it has been pro-fiscus or pro-taxpayer in its deliberations of tax avoidance cases. The treatise focuses specifically on the judicial responses to the General Anti-avoidance Rule Section 103 of the Income Tax Act No. 58 of 1962. In order to show the judicial approaches and/or responses to tax avoidance in South Africa, a selection of income tax cases have been used to illustrate how the judges have interpreted the GAAR and whether they have been sympathetic to the tax payer or to the fiscus. The cases used in this study stem from the old GAAR section 103. There have not been important cases dealing with the new GAAR section 80A to 80L of the Income Tax Act. In the final analysis of this research it would seem that the effectiveness and scope of the GAAR depends ultimately on its interpretation by the courts. Many of the cases that have been decided under section 103 (1) have provided disappointing outcomes for SARS. However it is noteworthy that the courts which were previously taking a restrictive approach and were pro-taxpayer in their deliberations are beginning to take a different approach and are gallant in their interpretation of the GAAR. Judges are slowly abandoning the long standing judicial approach which was that taxpayers are entitled to arrange their affairs in any legal way in order to minimize their tax and are going further and examining the real substance and purpose of the transactions entered into by taxpayers as opposed to the form of the transactions. The Supreme Court of Appeal has now set a precedent which goes deeper and examines the true intention of parties in entering into transactions and does not tie itself to labels that parties have attached to their transactions. This recent judicial attitude and zeal exhibited by the courts will without a doubt hinder tax avoidance activity and strengthen the effectiveness and scope of the new GAAR sections 80A to 80L.

M.Com. (Taxation) / The transition of South Africa to a democracy signifies large-scale changes in the political and economic spheres. The public sector, one of the main participants in the economy, does not escape this transformation. A more democratic structure entails, inter alia, increased empowerment of sub-national levels of government. This means that various functions must be devolved to provinces along with certain revenue sources in a bid to increase their autonomy and efficiency in service delivery. The fundamental aim of this paper is to analyze the intended future constitutional order of South Africa according to theoretical principles of decentralisation and tax devolution, and to propose a suitable tax framework for the new order. A primary prerequisite for a new tax structure is that the economic return on the revenue absorbed by government should be maximised. The problem is that some taxes are suitable for devolution and some should remain in the control of the national government. Furthermore, existing tax structures have to be considered when devising new tax frameworks.

This study was undertaken to analyse the developments in the anti avoidance legislation over a five year period from 1 March 2006 to 28 February 2011. Emphasis were placed on describing the road from the old section 103 provisions leading to the new general anti avoidance rules (GAAR) as contained in sections 80A to 80L of the Income Tax Act 58 of 1962. The study began with a detailed analysis of the differences between tax evasion and tax avoidance based on definitions and interpretations by various courts. It then went further in chapter two to formulate an acceptable distinction between Tax evasion, Tax planning and impermissible tax avoidance as currently used by the South African Revenue Services (SARS). It appeared from the study that firstly, courts have historically reviewed the circumstances surrounding an arrangement when determining whether tax evasion has occurred. The new GAAR requires the individual steps of an arrangement to be reviewed in isolation. Secondly, the courts have historically held that the purpose test, when determining the taxpayer‘s purpose, was subjective. The wording of the new GAAR indicates that this test is now objective. Thirdly, the courts have historically viewed the abnormality of an arrangement based of the surrounding circumstances. The wording of the new GAAR requires an objective view of the arrangement. A comparison was made between countries that have adopted statutory GAAR with a view of understanding how they have applied these general anti avoidance provisions successfully to tax avoidance cases. This comparison revealed that there is an inconsistent application of these general anti avoidance provisions by different countries. Courts and administrators apply them differently, based on circumstances and the nature of avoidance. Lastly, it has been acknowledged that most avoidance schemes are very complex and their perpetrators are always on the look for gaps in tax systems, hence any avoidance legislation to effectively curb tax evasion will need to be revised on a regular basis. Therefore, the Commissioner would be expected to issue regular updates on anti avoidance provisions and latest developments in the form of interpretation and or practice notes. / Thesis (MBA)-University of KwaZulu-Natal, Westville, 2011.

This research examined the concept of base erosion and profit shifting in the context of tax schemes employed by multinational corporations. The objective of this thesis was to identify weaknesses within South Africa’s income tax legislation, based on these schemes, and further to propose recommendations to counter the occurrence of base erosion and profit shifting by multinational companies. The research also comprised of a limited review of current global and South African initiatives to address the problem of base erosion and profit shifting. It was concluded that there are a number of weaknesses in the definitions and provisions of the South African income tax legislation that need to be addressed in order to reduce base erosion and profit shifting. Brief recommendations were proposed in relation to each of the weaknesses, in order to address them.

This treatise was undertaken to critically analyse the new general anti avoidance rules (new GAAR) as set out in sections 80A to 80L of the Income Tax Act1. A discussion on the difference between tax evasion and tax avoidance was performed in the first chapter. The goals of this treatise were then set out. An analysis of the requirements for the application of the new GAAR was performed in the second chapter. The courts have historically reviewed the circumstances surrounding an arrangement when determining whether tax avoidance has occurred. The new GAAR requires the individual steps of an arrangement to be reviewed in isolation. Secondly, the courts have historically held that the purpose test, when determining the taxpayer‘s purpose, was subjective. The wording of the new GAAR indicates that this test is now objective. Thirdly, the courts have historically viewed the abnormality of an arrangement based of the surrounding circumstances. The wording of the new GAAR requires an objective view of the arrangement. An analysis of the secondary provisions contained in sections 80I, 80B and 80J of the new GAAR was performed in the third chapter. With regards to section 80B, it was submitted that the Commissioner should issue an Interpretation Note detailing all the methods ―he deems appropriate.

Tax avoidance has been the subject of intense scrutiny lately by both the South African Revenue Service ("the SARS") and the media. This attention stems largely from the recent withdrawal of section 103(1) together with the introduction of section 80A to 80L of the South African Income Tax Act. However, this attention is not limited to South Africa. Revenue authorities worldwide have focused on the task of challenging tax avoidance. The approach of the SARS to tackling tax avoidance has been multi-faceted. In the Discussion Paper on Tax Avoidance and Section 103 (1) of the South African Income Tax Act they begin with a review of the distinction between tax evasion, tax avoidance and tax planning. Following a call for comment the SARS issued an Interim Response followed by the Revised Proposals which culminated in the withdrawal of the longstanding general anti-avoidance rules housed in section 103(1) and the introduction of new and more comprehensive anti-avoidance rules. In addition, the SARS has adopted an ongoing media campaign stressing the importance of paying tax in a country with a large development agenda like that of South Africa, the need for taxpayers to adopt a responsible attitude to the management of tax and the inclusion of responsible tax management as the greatest measure of a taxpayer's corporate and social investment. In tandem with this message the SARS have sought to vilify those taxpayers who engage in tax avoidance. The message is clear: tax avoidance carries reputational risks; those who engage in tax avoidance are unpatriotic or immoral and their actions simply result in an unfair shifting of the tax burden. The SARS is not alone in the above approach. Around the world tax authorities have been echoing the same message. The message appears to be working. Accounting firms speak of a "creeping conservatism" that has pervaded company boardrooms. What is not clear, however, is whether taxpayers, in becoming more conservative, are simply more fully aware of tax risks and are making informed decisions or whether they are simply responding to external events, such as the worldwide focus by revenue authorities and the media on tax avoidance. Whatever the reason, it is now critical, particularly in the case of corporate taxpayers, that their policies for tax and its attendant risks need to be as sophisticated, coherent and transparent as its policies in all other areas involving multiple stakeholders, such as suppliers, customers, staff and investors. How does a company begin to set its tax philosophy and strategic direction or to determine its appetite for risk? A starting point, it is submitted would be a review of the distinction between tax evasion, avoidance and planning with a heightened sensitivity to the unfamiliar ethical, moral and social risks. The goal of this thesis was to clearly define the distinction between tax evasion, tax avoidance and tax planning from a legal interpretive, ethical and historical perspective in order to develop a rudimentary framework for the responsible management of strategic tax decisions, in the light of the new South African general anti-avoidance legislation. The research methodology entails a qualitative research orientation consisting of a critical conceptual analysis of tax evasion and tax avoidance, with a view to establishing a basic framework to be used by taxpayers to make informed decisions on tax matters. The analysis of the distinction in this work culminated in a diagrammatic representation of the distinction between tax evasion, tax avoidance and tax planning emphasising the different types of tax avoidance from least aggressive to the most abusive and from the least objectionable to most objectionable. It is anticipated that a visual representation of the distinction, however flawed, would result in a far more pragmatic tool to taxpayers than a lengthy document. From a glance taxpayers can determine the following: That tax avoidance is legal; that different forms of tax avoidance exist, some forms being more aggressive than others; that aggressive forms of tax avoidance carry reputational risks; and that in certain circumstances aggressive tax avoidance schemes may border on tax evasion. This, it is envisaged, may prompt taxpayers to ask the right questions when faced with an external or in-house tax avoidance arrangement rather than simply blindly accepting or rejecting the arrangement.

The additional tax ("penalties") imposable in terms of section 76(1) of the Income Tax Act (No 58 of 1962) when a taxpayer is in default, can be very harsh (up to 200% of the tax properly chargeable). The Commissioner may, in terms of section 76(2)(a), remit any penalty imposed, as he sees fit. However, when there was intent on the part of the taxpayer to evade the payment of tax, the Commissioner may not remit any portion of the 200% penalty imposable, unless he is of the opinion that "extenuating circumstances" exist. This dissertation examines the meaning of "extenuating circumstances", as interpreted by the judiciary, and lists the factors and defences that a taxpayer may plead to justify a remission of penalties, both in the case of an intention by the taxpayer to evade tax and in cases where the taxpayer is merely in default of section 76(1). / Accounting / MCOM (Accounting)