A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, in partial fulfilment of the requirements for the degree of Master of Commerce (specialising in Taxation) Johannesburg, 2015 / The Katz Commission recognised that South Africa could benefit from multinational enterprise (MNE) groups headquartering in South Africa. MNE headquarter companies create jobs and attract highly skilled individuals who impact on the economies in which they reside. These highly skilled individuals are also high taxpayers in the countries where they provide their services. South Africa has a number of attributes which would encourage MNE groups to headquarter in South Africa but the cost of doing business with the rest of Africa is high due to withholding taxes levied by African countries on technical and management fees. Countries with low tax rates attract MNE groups to headquarter in those countries as this effectively reduces the cost of doing business with the rest of Africa. The National Treasury introduced section 6quin of the Income Tax Act to provide effective relief to the South African taxpayer from double taxation on South African-sourced service fees charged to other countries and, in particular, other African countries. An examination is conducted on the impact of double taxation and whether section 6quin provides more effective relief from double taxation compared to other double tax relief mechanisms available to the South African taxpayer which will incentivise MNE groups to headquarter in South Africa. An analysis is performed on the income tax forfeited by the South African Receiver of Revenue (SARS) in the National Treasury providing this incentive to South African headquarter companies compared to if the headquarter is relocated out of South Africa. The results indicate that section 6quin provides a feasible solution to reducing double taxation on South African-sourced services provided to other African countries which incentivises MNE groups to headquarter in South Africa. If section 6quin is withdrawn from the South African Income Tax Act, MNE groups potentially will not headquarter in South Africa and seek low tax jurisdictions to reduce costs of providing headquarter services into Africa. This study indicates that the fiscus stands to lose more income tax if the MNE group headquarters outside of South Africa compared to the relief provided to the MNE group headquarter company in accordance with section 6quin by reducing income tax payable. This study informs MNE groups seeking to headquarter in South Africa and the National Treasury of the effects of double taxation on South African-sourced services provided to other African countries and the requirement for relief against double taxation. This study highlights the need for the National Treasury to retain section 6quin in the Income Tax Act or provide an alternate suitable solution to reducing double taxation on South African-sourced services provided by South African headquarter companies to other African countries. / MT2017

Thesis (MAcc)--University of Stellenbosch, 2010. / AFRIKAANSE OPSOMMING: Franchise besighede is ʼn alledaagse verskynsel in die Suid-Afrikaanse en Internasionale besigheidswêreld. Ingevolge afdeling 12(2)(c) van Regulasie 287 van die Petroleum Produkte Wet No. 120 van 1977 word ʼn groothandelaar van petroleum produkte verbied om ʼn kleinhandellisensie te besit anders as vir doeleindes van opleiding. Die gevolg hiervan is dat petroleum maatskappye gebruik maak van franchisehouers om hulle vulstasies en geriefswinkels namens hulle te bedryf aangesien die franchisehouers toegelaat word om kleinhandellisensies te besit vir besigheidsdoeleindes. Die konsep van ʼn franchise is daarop gebaseer dat ʼn franchisehouer die franchise van ʼn bestaande, en dikwels welvarende, besigheid bekom vanaf ʼn franchisegewer en dan die besigheid onder die vaandel van daardie franchise bedryf. Die franchisehouer betaal dikwels ʼn eenmalige enkelbedrag franchisefooi aan die franchisegewer en addisioneel daartoe ʼn deurlopende franchisefooi, gewoonlik op ʼn maandelikse basis. Die deurlopende franchisefooi word normaalweg bereken as ʼn persentasie van omset van die franchise besigheid, of dit word bereken volgens ʼn alternatiewe formule of metode soos uiteengesit in die betrokke franchise-ooreenkoms. Wanneer franchisehouers hul inkomstebelasting vir ʼn spesifieke jaar van aanslag bereken, word hulle gekonfronteer met die vraag oor hoe om die franchisefooie vir inkomstebelastingdoeleindes te hanteer. Die inkomstebelasting hantering van die eenmalige enkelbedrag franchisefooi blyk meer onduidelik te wees as dié van die deurlopende fooi. Die bewoording wat in die franchise-ooreenkoms gebruik word om hierdie eenmalige enkelbedrag te omskryf is dikwels vaag en verg verdere interpretasie wat uit die aard van die saak die korrekte inkomstebelasting hantering daarvan bemoeilik. Hierdie studie stel gevolglik ondersoek in na die inkomstebelastinghantering van franchisefooie betaalbaar deur die franchisehouers in die Suid-Afrikaanse petroleumbedryf ingevolge die Suid-Afrikaanse Inkomstebelastingwet No. 58 van 1962. / ENGLISH ABSTRACT: Franchise businesses are an everyday occurrence in the South African and International business world. A wholesaler of petroleum products is prohibited in terms of section 12(2)(c) of Regulation 287 of the Petroleum Products Act No. 120 of 1977 to own a retail license for purposes other than that of training. As a result, petroleum companies make use of franchises where the franchisee is allowed to own a retail license and is therefore able to operate a service station and convenience store on the companies’ behalf. The concept of a franchise is based on the principle that a franchisee obtains the franchise of an existing, often prosperous, business from a franchisor, and then operates the business under the banner of this franchise. The franchisee usually pays a once-off lump sum fee and in addition to this fee a continuous franchise fee, usually on a monthly basis. The continuous franchise fee is usually calculated as a percentage of the turnover of the franchise business, or it is calculated using an alternative formula or method as set out in the franchise agreement. Franchisees are confronted with the question on how to treat the payment of the franchise fees for income tax purposes when they calculate their income tax liability for a specific year of assessment. The income tax treatment of the once-off lump sum franchise fee seems to be less clear than that of the continuous franchise fee. The wording used in franchise agreements to define and describe the once-off fee is often vague and requires further interpretation. This encumbers the correct income tax treatment of the fee. This study therefore investigates the income tax treatment of franchise fees payable by franchisees in the South African petroleum industry in terms of the South African Income Tax Act No. 58 of 1962.

Thesis (MAcc)--Stellenbosch University, 2012. / ENGLISH ABSTRACT: The primary aim of this study is to provide a critical evaluation of the correctness of the judgment of the Supreme Court of Appeal in the case of Commissioner: South African Revenue Services v Brummeria Renaissance (Pty) Ltd [2007] SCA 99 (RSA). The primary question investigated in this study, is whether the court had indeed decided correctly when it concluded that: “…the right to retain and use the borrowed funds without paying interest had a money value, and accordingly that the value of such a right must be included in the companies‟ gross income for the years in which such rights accrued to the companies.” The question will be investigated by: i. evaluating the relevance of the doctrine plus valet quod agitur quod quam simulate concipitur (the “plus valet-doctrine”) and the in fraudem legis-doctrine, in relation to the facts of the Brummeria-case; ii. consideration of certain basic principles regarding „rights‟ (real rights, corporeal rights as well as rights of recovery and performances), „property‟, interpretation of contracts as it manifests in South African Law, and the common law principles regarding mutuum and considering the relevance thereof in the Brummeria-case; iii. considering the principles of pactum antichreseos and the relevance thereof to the facts of the Brummeria-case; iv. considering further legal tax technical aspects with a view to consider whether the “accruals” of the Brummeria-case have indeed constituted an „amount‟ for purposes of the „gross income‟-definition in section 1 of the Act; and v. considering the exact moment (or year of assessment) when an amount (based on the assumption that an „amount‟ has accrued to the taxpayer) had to be included in the taxpayer‟s gross income. The relevance of United States tax rules (regarding the income tax implications of interest-free loans) on interest-free loans in Life Rights Agreements will also be considered. / AFRIKAANSE OPSOMMING: Die oorkoepelende doelstelling van hierdie studie is om ‘n kritiese evaluering van die korrektheid van die Hoogste Hof van Appèl se uitspraak in die saak van Kommissaris: Suid-Afrikaanse Inkomstediens v Brummeria Renaissance (Edms) Bpk [2007] SCA 99 (RSA) te verskaf. Die oorkoepelende vraagstuk wat in hierdie studie ondersoek word, is of die Hof inderdaad gelyk gehad het ten opsigte van die beslissing dat: “…the right to retain and use the borrowed funds without paying interest had a money value, and accordingly that the value of such a right must be included in the companies’ gross income for the years in which such rights accrued to the companies.” Hierdie vraagstuk sal ondersoek word deur: i. die toepaslikheid van die leerstelling plus valet quod agitur quod quam simulate concipitur (die “plus valet-leerstelling”) en die in fraudem legis-leerstelling op die Brummeria-feitestel te oorweeg; ii. sekere basiese beginsels rakende ‘regte’ (saaklike regte en sake sowel as vorderingsregte en prestasies), ‘eiendom’, uitleg van kontrakte soos dit in die Suid-Afrikaanse Reg manifesteer, en die gemeenregtelike beginsels rakende mutuum te ondersoek en die toepaslikheid daarvan in die Brummeria-saak te oorweeg; iii. die beginsels van pactum antichreseos en die toepaslikheid daarvan in die Brummeria-feitestel te oorweeg; iv. verdere regstegniese aspekte vanuit ‘n belastingoogpunt te ondersoek ten einde te oorweeg of die “toevallings” van die Brummeria-saak inderdaad ‘n ‘bedrag’ vir doeleindes van die ‘bruto inkomste’-definisie in artikel 1 van die Wet daarstel; en v. oorweging te skenk aan die juiste tydstip (oftewel jaar van aanslag) waarop ‘n bedrag (gebaseer op die aanname dat ‘n ‘bedrag’ die belastingpligtige wel toegeval het) by die belastingpligtige se bruto inkomste ingesluit moet word. Voorts sal die toepaslikheid van Amerikaanse belastingreëls (betreffende die inkomstebelastingimplikasies van rentevrye lenings) op die rentevrye lenings in die Lewensregooreenkomste ook oorweeg word.

Thesis (MAcc)--Stellenbosch University, 2014. / ENGLISH ABSTRACT: Cloud computing is a universal occurrence, to which South Africa is no exception. The technology of cloud computing has been the focus of extensive research, but the tax consequences have not been investigated in such research. However, the nature of cloud computing activities, which are conducted via the internet, highlights many difficulties related to taxation. The main taxation-related problems are elicited by the composition of these activities, namely the making available of the cloud by the service provider via the internet and the subsequent use of it by the consumer at any worldwide location. This composition makes the classification of such transactions and the subsequent taxation source determination problematic. Yet, from a South African perspective, there is little assistance regarding these problems. As a result, significant income may escape South African taxation liabilities. The aim of this study was to investigate South African taxation consequences for non-resident1 cloud service providers who conduct activities with residents1 via the internet. The focus of the study was twofold: first, to identify factors, which indicates the classification of cloud computing activities as either a lease, a royalty (or its closely related know-how) or a service; and second, to determine the tax source of each of these classifications. Hence, this study sought to determine whether non-resident cloud service providers could possibly be liable for South African taxation and to identify related challenges that need to be addressed to ensure the collection of such taxes. / AFRIKAANSE OPSOMMING: Wolkbewerking (“Cloud computing”) is wêreldwye verskynsel wat ook in Suid- Afrika voorkom. Wolkbewerkingstegnologie was al die fokuspunt van omvangryke navorsing, alhoewel die belastinggevolge nog nie in sodanige navorsing ondersoek is nie. Die aard van wolkbewerkingsaktiwiteite, wat via die internet plaasvind, benadruk egter verskeie belastingverwante vraagstukke. Die hoofbelastingvraagstukke word deur die samestelling van hierdie aktiwiteite, naamlik die beskikbaarstelling van die sogenaamde wolk deur die diensverskaffer via die internet en die gevolglike gebruik daarvan deur die verbruiker te enige wêreldwye ligging, uitgelig. Die klassifikasie en daaropvolgende vasstelling van die belastingbron van hierdie aktiwiteite word as gevolg van hierdie samestelling problematies. Tog, vanaf Suid-Afrikaanse perspektief, bestaan min leiding vir hierdie vraagstukke. As gevolg hiervan kan beduidende inkomstebedrae moontlik Suid-Afrikaanse belastingaanspreeklikheid ontsnap. Die doel van hierdie studie was om ondersoek in te stel na die Suid-Afrikaanse belastinggevolge vir nie-inwoner2 wolkdiensverskaffers wat via die internet met inwoners2 handelsaktiwiteite uitvoer. Die fokus van hierdie studie was tweeledig: eerstens om faktore te identifiseer wat die klassifikasie van wolkbewerkingsaktiwiteite as óf huur, óf tantième (of nou-verwante bedryfskennis) óf dienste kan aandui; en tweedens om die belasting bronne van elk van hierdie klassifikasies vas te stel. Gevolglik is daar in hierdie studie gepoog om vas te stel of nie-inwoner wolkdiensverskaffers moontlik vir Suid-Afrikaanse belasting aanspreeklik mag wees en om verwante uitdagings wat aangespreek moet word om die invordering van hierdie belasting te verseker, te identifiseer.

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.

M.Econ. / Please refer to full text to view abstract

M.Comm. / Since the April 1994 elections the issue of economic empowerment and growth have had a high priority on the agenda of the Government of National Unity of South Africa. Small and medium enterprises (SME's) represent an important vehicle to address the challenges of job creation, economic growth and equity in our country. Throughout the world one finds that SME's are playing a critical role in absorbing labour, penetrating new markets and generally expanding economies in creative and innovative ways. Research indicates that there are more than 800 000 small and medium enterprises in South Africa, absorbing about a quarter of the approximately 15 million people which comprises the formal labour force. According to the White Paper on National Strategy for the Development and Promotion of Small Business in South Africa (1995:10), this does not include about 3,5 million people who are involved in some or other type of survivalist enterprise activity force. While the importance of large industrial, mining and other enterprises for the growth of the economy cannot be denied, there is ample evidence that the labour absorptive capacity of the small business sector is high, with the average capital cost per job created in this sector, usually being lower than in big businesses. In addition the small business sector's role in technical and other innovations is vital for the many challenges facing the South African economy. Notwithstanding the importance of small enterprises in the South African economy, they are still faced with a wide range of constraints and problems that are common to small enterprises. There can be no doubt that compared to big businesses in South Africa and small businesses in other countries, these problems have not been sufficiently addressed. The constraints relate, amongst others, to the legal and regulatory environment confronting SME's, the access to markets, finance, the acquisition of skills and management expertise and in some cases, the tax burden. This study will be aimed at addressing the problems that small enterprises experience with the South African Tax System. The dissertation is based on various Acts as effective during April 1997. Various factors were identified in the Interim Report of the Commission of Inquiry into certain aspects of the Tax Structure of South Africa, (Katz, November 1994:150) under the chairmanship of Prof. M.M. Katz. These factors include, amongst others, the following: Small and medium-sized enterprises have a greater dependence on the working proprietor as a source of funds, since they do not have access to public securities markets for the issue of equity or long term loan capital. The taxation of the income of the working proprietor therefore directly depletes their principal source of equity capital, requiring the entrepreneur to make greater use of short term debt finance. This in turn increases their risk exposure; Whereas savings which flow via financial institutions (for example, through pension and life insurance contributions) to the corporate sector enjoys tax relief, no equivalent relief is available to working proprietors who invest in their own businesses; There is considerable evidence that the compliance burden of taxation falls disproportionately on smaller enterprises, who do not have expertise in the completion of tax returns or in other aspects of tax compliance, and either make use of expensive professional assistance or rely on the proprietor's own efforts. The compliance burden is aggravated by frequent changes in the tax system, complicated structures and rules, and the lack of taxpayer education opportunities. The problem of the compliance burden on smaller enterprises has probably become more severe in recent years as a consequence of the introduction of Value Added Tax and the fact Jiat the present Standard Income Tax on Employees personal income tax requires more detailed personnel records than the former Final Deduction System which it replaced; The general bias in tax systems towards favouring capital investment and penalising employment through investment relief and social security contributions tends to favour large firms, which have easier access to sources of capital, and discriminates against smaller firms which tend to be more labour intensive.

A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, in partial fulfilment of the requirements of the degree of Master of Commerce (specialising in Taxation), Johannesburg, 2017 / Tax Base Erosion and Profit Shifting (BEPS)1 has become an epidemic of global legal tax avoidance being used by Multinational Enterprises (MNEs). BEPS has resulted in the structuring of transactions within groups of companies, with these including: transfer pricing, manipulating prices of goods, services, management fees, professional fees, royalties, interest and dividends. This study is a critical analysis of South African legislation in relation to the Double Taxation Agreement (DTA) with the United Kingdom (UK). Reference is made to the Mutual Agreement Procedure (MAP) as proposed by the Organisation for Economic Co-operation and Development (OECD).2 Even though South Africa follows the OECD guidelines (2010),3 Advance Pricing Agreements (APA) are not included in South African legislation, which may result in double non-taxation or double taxation and disputes. Recourse in the event of double taxation is examined in this research report. The application of APA legislation in the UK, as a leading tax authority,4 is analysed, as well as Davis Tax Committee recommendations in relation to Transfer Pricing. KEYWORDS Advance Pricing Agreement, Arm’s length price, Base Erosion and Profit Shifting, Davis Tax Committee, Double Taxation, Double Taxation Agreement, Multinational Enterprises, Mutual Agreement Procedure, OECD, South African Revenue Service, Transfer Pricing. 1 Organisation for Economic Co-operation and Development (OECD). (n.d.a), ‘About BEPS and the inclusive framework’, <http://www.oecd.org/ctp/beps-about.htm>, retrieved 5 November 2016. 2 Organisation for Economic Co-operation and Development (OECD). (2010b), Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. Paris: OECD. 3 Supra note 2. 4 Broomberg, E. B. (2007), Tax avoidance then and now, Tax Planning Corporate and Personal, vol. 21, no. 5, pp112-118. / GR2018

The aim of this technical report is to provide a detailed and critical review of the suitability of the en commandite partnership for tax structuring both generally and specifically. The report takes cognisance of the requirements that a financial institution might consider in its determination of the utility of the en commandite partnership as a tax structuring tool in a structured or corporate finance environment. The report begins with an overview of the primarily legal requirements for the creation of a valid partnership. It then considers specifically whether the en commandite partnership is able to take the place of the 'Lessor Trust Arrangement' and researches specific issues germane to the enquiry. Specific legislation dealing with en commandite partnerships is then researched and includes a commentary on the provisions of s 24H and s 8(5)(a) of the Income Tax Act. Practical examples of the use of the en commandite partnership are then considered which challenges the concept of traditional loan finance and suggests the capital contribution as a tax efficient alternative. A consideration of the possibility of a challenge under the anti-avoidance provisions of the Income Tax Act concludes the report. / Thesis (LL.M.)-University of Natal, 1999.

The aim of this dissertation is to carry out the following: • Discuss the concept of residency in South Africa and the evolution to the residence basis of taxation in South Africa. • Examine the Organisation for Economic Co-operation and Development's (OECD) stance on the concept of 'effective management'. • Examine the laws of the United Kingdom, certain European countries and Australia with regard to the concepts of 'management and control', 'management or control', ' place of effective management' and 'effective management'. • Formulate a definition of the term 'place of effective management' in South Africa using these guidelines obtained from the various countries discussed. / Thesis (LL.M.)-University of KwaZulu-Natal, Durban, 2002.