Includes bibliographical references (leaves 54-55). / Secondary tax on companies (STC) and the new dividends tax and its exemptions therefrom could be in contravention of the non-discrimination provisions of Article 24(5) of the OECD MTC. This question has not been decided in a South African court. This dissertation proposes the resolution to this question. The outcome of this research may be particularly relevant in the context of the proposed new dividends tax and value extraction tax (“VET”) and the exemptions therefrom, which are, again, based on residency.

This research report investigates the determinants of divestiture choice in South Africa. In addition, it examines how the determinants are influenced by the period studied. There are three periods of interest, being the full sample period, the prefinancial crisis period and the post financial crisis period. The determinants of divestiture choice have not been investigated from a South African perspective by prior studies. This report therefore contributes to the literature by exploring a new context. The South African context is unique because of differing laws and regulations as well as socio-economic factors specific to countries in developing markets. This report makes a further contribution by updating the literature on determinants of divestiture choice as post financial crisis data is included in the data set. The research is based on a sample of 102 divestiture transactions (78 spin-offs and 24 sell-offs) over the period 1998 to 2017. Logistic regression is used to ascertain the determinants of divestiture choice using pre-divestiture data of the parent company. The results show that financial performance as measured by return on equity (ROE) and liquidity as measured by the current ratio are significant determinants of divestiture choice over the full sample period (1998 to 2017). The higher the firm’s financial performance, the higher the likelihood of divestiture through spin-off. Contrary to expectation, it was found that the higher the liquidity of the firm, the higher the likelihood of divestiture through sell-off. Financial distress, director ownership, Broad Based Black Economic Empowerment (BBBEE) and effective taxation rates are not found to be significant factors in determining divestiture choice over the entire period of study. Financial performance is found to be a significant determinant of divestiture choice over the pre-financial crisis period (1998 to 2006). The results for this period show that the higher the firm’s financial performance, the higher the likelihood of divestiture through spin-off. The remaining factors are not found to be significant for the prefinancial crisis period. No factors were found to be significant over the post financial crisis period (2009 to 2017). These findings imply that determinants of divestiture choice are not uniform for South Africa and the United States; nor for differing time periods in the South African context. This implies that divestiture determinants vary depending on the context and the economic cycle studied.

Includes abstract. / Includes bibliographical references. / The aim of this dissertation is to establish the relevance of the international interpretation of beneficial owner to SA’s interpretation of the concept. The phrase “beneficial owner” was introduced into the South African Income Tax Act in April 2012 following an intention to align South African tax as regards dividends with international norms. The concept is applied in a domestic context by various countries and in numerous bilateral tax treaties and has been a subject of debate across numerous foreign courts.

With all the excitement in South Africa about the 2010 FIFA World Cup kicking off on 11 June 2010, tax relief will be granted on import tax and VAT, amongst others, in terms of the Revenue Laws Amendment Act 20 of 2006 (hereafter referred to as RLAA). FIFA (Federation Internationale de Football Association), confirmed that SAFA may have the right to serve as a host for the 2010 FIFA World Cup, but in order to qualify 17 guarantees were to be given by South African government to FIFA which is a general requirement for all host cities. These guarantees will be provided by various government departments focusing on the financial environment, safety and security, intellectual property and marketing rights, transport and telecommunications as well as custom duties, other taxes and duties and levies by the Minister of Finance. The government of The Republic of South Africa issued several guarantees that they would comply with to meet certain requirements set out by FIFA for World Cup hosts (Wilson, 2008:1). These include, inter alia, the provision of taxation relief for qualifying individuals and entities. Trevor Manuel, former Minister of Finance, included certain provisions in the RLAA, to give effect to FIFA’s requirements. The RLAA created a tax-free bubble around the FIFA-designated sites so that profits on consumable and semi-durable goods sold within these areas will not be subject to Income tax; nor will VAT be levied. Tax relief will be given on specific goods and services for qualifying taxpayers, as defined in the Income Tax Act 58/1962 ("The Income Tax Act"), (Wilson, 2008:1). This relief system will be governed by an accompanying abuse paragraph in the legislation in order to limit any loss that may be suffered by the South African Revenue Service ("SARS"). The positive and negative impacts, which will arise from hosting such an international event, are important to discuss and consider.

The Sport industry has developed over the years and now can even form part of the entertainment industry. Sportspersons have become celebrities in their own right and their image rights are treated as commodities. The image rights of famous sportspersons are commercial products exploited by sports clubs and enterprises in promoting their brands through merchandising and endorsement deals. As a result, sportspersons earn income from the use of their image in promotional activities. The Income Tax Act No.58 of 1962 does not provide specific rules for the taxation of image rights payments and the Guide on the Taxation of Professional Sports Clubs and Players (the 2018 Guide) issued by the South African Revenue Service is not legally binding. Therefore, the income tax treatment of image rights payments is a subject of different interpretations and a cause for uncertainty. The capital or revenue nature (classification) of income from the sale or exploitation of image rights is unclear. The aim of this study was to determine the income tax classification of income derived by rugby, cricket and football players from the commercial exploitation of their image rights. The inquiry considered the regulations prescribed by the sport regulatory bodies, legislation, case law, literature and the section of the 2018 Guide which deals with image rights. A brief comparative study was also conducted to assess the tax position in the United Kingdom and United States of America. It was found that the South African law does not currently recognise an image right as a separable asset of an individual. Income emanates from the productive employment of an image right in lieu of its disposal therefore will form part of a sportspersons' gross income. The 2018 Guide also does not sufficiently address the income tax implications of the sale or exploitation of image rights. There is, therefore, a need for a legislative framework and a revised Guide to cater for the taxation of image rights payments.

"Today, transfer pricing is about the a/location of income of a multinational enterprise between nations. The introduction of anti-avoidance provisions were in th~ main sufficient to deter companies from shifting profit to overseas associates through under or over pricing of cross border transactions. Tax avoidance, was at the centre. Tax avoidance, today if present, is at the margins, not at the centre. Transfer pricing is a neutral concept. Often, it is used incorrectly in a pejorative sense, to mean a pricing decision by a multinational enterprise which shifts income from one member of a group to another." Transfer Pricing Strategy in a Global Economy by Jill C.Pagan and J Scott Wilkie.

This dissertation focusses on the tax implications of a portfolio transfer between short-term insurers. The commercial purpose of a portfolio transfer is for one insurer (‘transferee') to effectively take over the insurance policies of another insurer (‘transferor'), with no negative impact on the interest of the policy holders. In order to effect a portfolio transfer, the technical reserves recognised by the transferor in its Annual Financial Statements (‘AFS') are transferred to the transferee along with the working capital backing these reserves. The working capital is essentially an amount of cash and other liquid assets equal to the net technical reserve value. The research question that is addressed by this dissertation is: Does the current income tax legislation sufficiently address the tax consequences of the transfer of technical reserves and working capital between short-term insurers as part of a portfolio transfer to yield a fair and reasonable result from a tax perspective? In addressing the research question the dissertation analyses the nature of technical reserves from an accounting and regulatory perspective and considers the tax treatment thereof under the provisions of section 28 of the Income Tax Act No. 58 of 1962 (‘IT Act'), which deals with the taxation of short-term insurance business. It considers the tax implications of a portfolio transfer of technical reserves from both the perspective of the transferor and the transferee and considers international practise in this regard. This dissertation concludes that although the working capital will be included in the taxable income of the transferee (purchaser) there will not necessarily be a deduction from taxable income available for the transferor (seller). The transfer of technical reserves and working capital does not result in a profit or loss for either the transferor or the transferee and consequently such a transfer would be expected to be tax neutral. The tax treatment is therefore not in line with the commercial purpose of a portfolio transfer. Amendments to section 28 are thus required to specifically confirm that a deduction of the working capital will be available for the transferor (seller) and that the amount be included in the income of the transferee (purchaser) as this will create certainty and avoid inconsistent results from a tax policy perspective, especially given the significant values involved in these transactions.

Developments in technology have created a global market place for consumers. Consumers have the option of purchasing goods in a physical store or an online store. Consumers are no longer limited to shopping at physical stores in their own jurisdiction and can shop online from the convenience of their home. Consumers can acquire goods and services from any country in the world. Online shopping provides consumers with a wide selection of goods and services that may not be available in their own jurisdiction. Consumers favour purchasing online since the goods and services acquired from foreign suppliers are usually offered at better prices (price excludes VAT/GST). This creates an unfair advantage for foreign suppliers over local suppliers. The problem with selling a product to a consumer over the internet is that no physical product crosses through any physical border post. These products are not physical goods and are therefore referred to as services. Certain jurisdictions such as South Africa refer to these services as electronic services. Electronic services are remotely supplied by foreign suppliers to recipients resident in the Republic. Tax administrations lose revenue since there are no border posts acting as agent to collect VAT/GST and remitting the VAT/GST to the revenue authority. The foreign supplier would charge no VAT/GST on the supply and the consumer will fail to self‐declare the VAT/GST to the revenue authority. 1 April 2014, National Treasury introduced electronic services which required foreign suppliers of electronic services to register as vendors in the Republic. However, the implementation was postponed to 1 June 2014 to allow foreign suppliers to update its business systems. In 2015, further amendments were made to the electronic services provisions. However, in 2015 the Davis Tax Committee issued the first interim report on VAT to the Minister of Finance which highlighted concerns about the uncertainty and inconsistency in the application of the electronic services provisions outlined in the Regulations. This study aims to analyse the supply of cross border electronic services in the Republic. Any benefits and shortcomings will be assessed in a South African and international context. The VAT Act is based on the New Zealand GST Act. The GST Act will be analysed to identify areas of recommendation to improve the VAT Act, subject to the socio‐economic conditions in South Africa. The BEPS Report and VAT/GST Guidelines will be analysed to identify how the South African electronic services provisions have been adapted for a developing country based on developed country principles.

Employers have used various means to remunerate, retain and incentivize employees. One of these methods, is through the allocation of ownership in the employer to the employee, which help align the financial interests of the company and the staff member. SARS and National Treasury regulate the taxation of these forms of remuneration, typically called employee share incentive schemes, through section 8C of the Income Tax Act. A common practice among these schemes, is for the employer to impose some form of restriction on the equity shares issued to the employee, usually limiting the holder’s ability to dispose of the instrument. Once an equity share with a restriction is issued to an employee by an employer – section 8C of the Act applies. These types of structures are prevalently in the private equity industry, but with a slight nuance: the employee will receive an equity share indirectly or directly linked to the private equity fund(s) operated by the private equity fund management company. This provides the staff member with ‘skin in the game’, ensuring the longevity of the private equity fund can be sustained, and provides a foundation on which a rapport can be built with investors. The underlying investments in the private equity fund will provide the value of the equity shares in question. In most cases, these amounts will be in capital in nature owing to the length of holding period and the intention with which those investments are acquired. However, the effect of section 8C is to classify the gains on the employees’ equity shares as income rather than capital. The private equity industry finds itself in a precarious position with respect to the long-term equity incentivisation of staff and aligning this with the long-term nature of the fund’s underlying investments.

The aim of this dissertation is to analyse whether the current VAT treatment for educational institutions is still valid given the development within these institutions and if not, to identify alternative VAT treatments that may be used. Educational services are an exempt supply under section 12(h) of the VAT Act. The main reason for the exemption of educational services is that many of the institutions providing educational services were government institutions and to some extent financed by the government. However, over the years, the activities of institutions providing educational services have changed drastically and a reduced number of institutes are wholly subsidized in terms of government subsidies. In order to aid government grants and increase income, these institutions have increased their taxable activities considerably. Furthermore, privately owned and semi-subsidized institutions are accountable for their own costs and are not provided any or limited support from government. Numerous educational institutions within South Africa conduct an enterprise with the rendering of taxable supplies in addition to the provision of educational services. Such additional activities, provided the educational institute qualifies for and is VAT registered, are taxed at the standard rate. This in turn has created complications in administering the VAT Act, whereby these service providers are then required to carry out an apportionment calculation of VAT on their mixed supplies. This practice is inefficient and not cost effective. Furthermore, the ease of compliance, which was the basis in implementing the exemption, is diminished, as registration for VAT purposes is unavoidable. Educational institutions that render taxable supplies would be incurring inputs on associated costs. The effect of exempting educational services from the VAT net ultimately results in an increase in tuition fees as the burden of “hidden” or “trapped” cost is passed onto the student, as a result of the institution’s inability to claim a refund of the tax paid. As there is no recovery of input tax embedded in the price of exempt supplies, the cost of the tax included in the price must be borne by the entity that acquires the exempt supply and can only be recovered if the tax is passed on to customers. This is in effect contradictory to the initial intention of the government’s political and economic objective in respect of education, to ensure access to education to all on a non-discriminatory basis. As the objective and intention of the legislation towards exempting educational services is no longer satisfied, it must be reassessed and the treatment relating thereto re-examined. The first alternate VAT treatment recommended is for educational services to be zero rated, this will reduce the administrative burden most educational institutions currently face in terms of carrying out complex apportionment calculations and will keep with the original intention of the VATCOM. Furthermore educational institutions will have additional funding via the release of input tax credits which may potentially result in a reduction in the percentage increase in student fees in future periods the burden of the ‘hidden’ or ‘trapped cost’ will not be passed onto the student. Other VAT treatments recommended should zero-rating fail is to tax educational services at a reduced rate or include educational services as a welfare organization activity. Should the above-recommended VAT treatments not be feasible it is suggested that the current VAT treatment be improved by providing additional guidance on what supplies can be included as educational services.