Thesis (MRek) -- Stellenbosch University, 2003. / ENGLISH ABSTRACT: The introduction of section 9E in the Income Tax Act, NO.58 of 1962 (hereafter "the Act") became effective on 23 February 2000. The main reasons for the introduction of this was, inter alia, to broaden the tax base and to phase in the residency basis of taxation. Consequently are the foreign dividend rules of section 9E interrelated to the foreign income rules of section 90, being the application of the residence basis of taxation. The main objective of this study is to investigate the taxation of foreign dividends in the Republic of South Africa. The introduction of section 9E saw new terminology introduced, which need analysis. This analysis is made possible by supplying the definitions from the Act, as well as making use of national and international case law. Further investigation is also done as to the relevance of section 9E to other sections in the Act, relevant anti-avoidance rules regarding foreign dividends, the effect of section 9E on investment income from tax havens, with specific reference to natural persons, the effect of taxation of foreign dividends on the migration- and investment decisions of non-residents, relief provided regarding double taxation and section 9E's effect on secondary taxation on companies. Lastly, the collection of taxation on foreign dividends is investigated. / AFRIKAANSE OPSOMMING: Die invoeging van artikel 9E in die Inkomstebelastingwet, No.58 van 1962 (hierna "die Wet") het van krag geword op 23 Februarie 2000. Die hoofredes vir die invoeging van die artikel in die Wet was onder andere om die belastingbasis te verbreed en om die verblyfbasis van belasting in te faseer. Juis as gevolg van laasgenoemde, word reels rakende buitelandse dividende in artikel 9E gekombineer met die buitelandse inkomste-reels van artikel9D. Die hoofdoel van hierdie studie is om belasting op buitelandse dividende in die Republiek van Suid Afrika te ondersoek. Met die invoeging van artikel 9E het daar 'n aantal nuwe terme te voorskyn gekom, wat hul ontleding noodsaak. Hierdie ontleding word moontlik gemaak deur bloot die definisies uit die Wet self weer te gee, asook deur die gebruik van nasionale en internasionale regspraak . Verdere ondersoek word ook gedoen na die toepaslikheid van artikel 9E op ander artikels in die Wet, relevante teenvermydingsbepalings met betrekking tot buitelandse dividende, die invloed van artikel 9E op beleggingsinkomste uit belastinghawens, met spesifieke verwysing na belegging deur natuurlike persone, die invloed van belasting op buitelandse dividende op die migrasieen beleggingsbesluite van nie-inwoners, verligting wat beskikbaar is ten opsigte van dubbelbelasting en die verband wat artikel 9E hou met sekondere belasting op maatskappye. Laastens word die invordering van belasting op buitelandse dividende ondersoek.

Thesis (MCom)--Stellenbosch University, 1999. / ENGLISH ABSTRACT: lt is internationally accepted that Internet is the trade route of the future. Although Internet trading is still in its infancy the effect of Internet on taxation needs to be adressed. Internet defies geographic borders and leads to the questioning of the principles underlying income tax. Income tax principles are traditionally based on the existence of some form of physical presence (either residency, source of income or that of a permanent establishment) in a jurisdiction before tax can be levied. The fact that Internet can provide substantial economic activity in a jurisdiction without any physical presence, requires interpretation of and/or amendments to the traditional income tax principles. The South African income tax principles are based on the source of income. In this study the impact of Internet on the applicability of the traditional source rules, in terms of the South African Income Tax Act, no. 58 of 1962, was investigated. The study first outlines the principles and methodology laid down by South African courts in determining the source of income. These principles and methodology are then tested in an Internet environment. lt is concluded that Internet requires a reinterpretation of certain of the traditional principles, i.e.: • The fact that a dominant source rule is applied. • The classification of products and services with a digitalised content within the existing principles. • The finding of a physical location when transactions are concluded in cyberspace. • The applicability of certain deemed source rules, i.e. section 9(1 )(a), 9(1)(d), 9(1)(dbis) and certain aspects of section 9(1)(b), in an Internet environment. In obtaining a sollution for South Africa the international initiatives regarding Internet and taxation, under the guidance of the Committee on Fiscal Affairs of the Organisation for Enonomic Co-operation and Development (OECD), were taken into account. The first alternative to the traditional South African source rules that was investigated was the permanent establishment principle, as recommended by the Katz Commission in their Fifth Interim Report. Other alternatives to the permanent establishment principle were also investigated, i.e. the residence principle, formal requirements and an Internet tax. The interim solution for South Africa seems to be the acceptance of the permanent establishment principle. This principle needs interpretation and/or amendment due to the effect of Internet. In this study amendments to the permanent establishment principle are suggested in order to provide the necessary clarity in the Internet environment. A closing remark is made that Internet might well change income tax as we know it today. Internet has the ability to simplify tax systems. None of the income tax alternatives provide simple tax solutions. The tax of the future seems to be some form of indirect tax. Internet is an international medium and addresses international tax issues. South Africa will, by accepting the permanent establishment principle, be in a position to join the co-ordinated efforts towards solving the Internet related tax problems while aiming to protect our tax base. / AFRIKAANSE OPSOMMING: Internet word internasionaal as die handelsroete van die toekoms beskou. Alhoewel lnternethandel nog in sy kinderskoene is, moet die invloed van Internet op belasting aangespreek word. lnternethandel misken geografiese grense en lei tot die bevraagtekening van die beginsels waarop inkomstebelasting gebaseer is. lnkomstebelastingbeginsels berus tradisioneel op die bestaan van 'n vorm van fisiese teenwoordigheid in 'n jurisdiksie (hetsy verblyf, bron van inkomste of die bestaan van 'n permanentesaak) alvorens belasting gehef kan word. Die feit dat Internet wesenlike ekonomiese aktiwiteite in 'n jurisdiksie kan bewerkstellig sonder dat daar enige fisiese teenwoordigheid is, noodsaak die herinterpretasie van en/of aanpassings aan die tradisionele inkomstebelastingbeginsels. Die Suid-Afrikaanse inkomstebelastingbeginsels berus op die bron van inkomste. In hierdie studie is die invloed van Internet op die toepaslikheid van die tradisionele bronreels, in terme van die lnkomstebelastingwet, no. 58 van 1962, ondersoek. In die studie is die beginsels en reels wat deur die Suid-Afrikaanse howe neergele word by die vasstelling van die bron van inkomste eerstens ontleed. Daarna is die beginsels en reels in die lnternetomgewing getoets. Die afleiding word gemaak dat Internet die herinterpretasie van sekere van die tradisionele beginsels en reels verg, naamlik: • Die feit dat 'n dominante bronreel toegepas word. • Die klassifisering van produkte en dienste met 'n digitale inhoud binne die tradisionele beginsels. • Die vasstelling van 'n fisiese plek indien transaksies in die kuberruimte plaasvind. • Die toepaslikheid van sekere geagtebronreels, naamlik artikel 9(1 )(a), 9(1)(d), 9(1)(dbis) en sekere aspekte van artikel 9(1)(b), in die I nternetomgewing. In die soeke na 'n oplossing vir Suid-Afrika is die internasionale inisiatiewe rondom Internet en belasting, onder leiding van die Fiskale Komitee van die Organisation for Economic Co-operation and Development (OECD), in ag geneem. Die eerste alternatief op die tradisionele Suid-Afrikaanse bronreels wat ondersoek is, is die permanantesaak-beginsel, soos voorgestel deur die Katzkommissie in die Vyfde Verslag. Ander alternatiewe wat ook ondersoek is, is die verblyfbeginsel, formele handelinge en 'n lnternetbelasting. Die oplossing vir die hede vir Suid-Afrika blyk die aanvaarding van die permanantesaak-beginsel te wees. Hierdie beginsel verg herinterpretasie en/of aanpassings weens die invloed van Internet. In hierdie studie word aanpassings aan die permanentesaak-beginsel voorgestel ten einde die nodige duidelikheid binne die lnternetomgewing te verskaf. Ter afsluiting word vermeld dat Internet weliswaar die einde mag aandui vir inkomstebelastingstelsels wereldwyd. Internet besit die vermoe om belasting te vereenvoudig. Die inkomstebelasting alternatiewe wat in hierdie studie ondersoek is het nie eenvoudige oplossings gebied nie. Die belasting van die toekoms blyk 'n vorm van indirekte belasting te wees. Internet is 'n internasionale medium en spreek internasionale belastingkwessies aan. Die aanvaarding van die permanentesaak-beginsel sal SuidAfrika in 'n goeie posisie plaas om aan die internasionale inisiatiewe rondom Internet en belasting deel te neem en om terselfdertyd ons belastingbasis te beskerm.

published_or_final_version / Law / Master / Master of Laws

A research report submitted to the Faculty of Commerce, Law, and Management, in partial fulfilment of the requirements for the degree of Masters of Commerce specializing in Taxation, 31 March 2017 / Today’s world is driven by mobile technology from which businesses’ function by interacting and transacting with customers in such a way that allows no physical contact between the parties. This cloud transacting has been enabled by software applications that exist on mobile devises allowing trade to take place across borders within different jurisdiction. These software applications have eliminated the need to establish subsidiaries and branches in countries which makes it difficult to locate the jurisdiction from which the cloud transaction has taken place. This new shift in physical operations has enabled Multinational Corporations MNCs to exploit gaps created in the international taxation arena due to old tax laws that were created at the time when border controls and regulations in the capital markets were relied on to protect against base erosion and profit shifting (BEPS). The main purpose of this research paper is to interrogate the current gaps that exist in the tax legislation specifically relating to the applications economy, reviewing relevant case studies both locally and internationally, in an attempt to fill the gaps in the local tax regime. This research will propose solutions to these gaps in an attempt to contribute towards South African applications technology taxation literature. / GR2018

A research report to be submitted to the Faculty of Commerce, Law and Management in partial fulfilment of the requirements for the degree of Master of Commerce (specialising in Taxation), Johannesburg, 2017 / Transfer pricing is a continuously evolving phenomenon and is a topical issue world-wide. With increasing inter-company cross-border transactions, multinational enterprises are using loopholes in the interaction of tax legislation of different countries as a tool to shift profits to a more favourable jurisdiction, thereby avoiding tax in the jurisdiction in which they are resident and eroding the resident jurisdiction’s tax base. This research report examines and discusses the substituted South African transfer pricing legislation that applies for the years of assessment commencing on or after 1 April 2012 as well as the related SARS guidance. An analysis of transfer pricing legislation and guidelines in three selected countries and the OECD transfer pricing guidelines will also be performed. The comparisons of the legislation and guidelines will highlight whether there are still weaknesses in the South African transfer pricing legislation and will indicate possible solutions to these weaknesses which will assist in reducing the erosion of the South African tax base. Key words: Tax, Transfer pricing, Tax avoidance, Base erosion and profit shifting, Multinational enterprises (‘MNEs’), South African Revenue Service (‘SARS’), Organisation for Economic Co-operation and Development (‘OECD’). / GR2018

Paragraph 7(1) of the VAT Act provides for the charging of VAT at 14 percent on the supply of goods or services by a vendor in the course or furtherance of an ‘enterprise’, the importation into South Africa of goods by any person or the supply of ‘imported services’. The term ‘enterprise’ has been interpreted to require an on-going activity and therefore once off sales should be excluded. The sale must relate to enterprise activities, thereby excluding private sales. Furthermore the enterprise activities are required to be carried out in the Republic or partly in the Republic. Establishing whether the enterprise activities are carried out in the Republic remains a contentious issue as the VAT Act does not specify the minimum required business activities to meet this criterion. ‘Imported services’ excludes services imported for the purposes of making taxable supplies and the liability of accounting for VAT on ‘imported services’ lies with the recipient of the imported service. Supplies (imported services) which are chargeable in terms of s 7(1)(a) and supplies, which if made in the Republic, are exempt from VAT or zero rated. ‘Imported services’ definition requires services to be consumed in South Africa. Services offered outside South Africa therefore generally do not qualify as imported services even the South African entity benefits from such services, for example a training course attended in a foreign country. Technological developments in the field of e-commerce globally have required countries to examine VAT laws relating to e-commerce. Extensive research has been done by the OECD on this topic, with reports issued on recommendations of how e-commerce should be taxed. Most guidance issued by the OECD on taxing e-commerce relates to indirect electronic commerce, which refers to goods or services where ordering, payment and delivery occur on line. Distinction is drawn between taxation of business-to-business transactions and business-to-consumer transactions. The OECD suggests that the ‘reverse-charge’ or self-assessment method should be applied to the taxing of B2B transactions resulting in minimal compliance and administrative costs. It is further recommended that for B2C transactions place of consumption should be defined as the recipient’s usual jurisdiction of residence and that non-resident suppliers should be required to register and pay VAT in the jurisdiction of the consumer, as this would result in the most effective tax collection method. ‘Enterprise’ includes electronic services from a foreign supplier where the recipient is a resident of South Africa or where the payment originated from a South African bank account. The Minister’s regulation, which came into effect on 1 June 2014, includes the following items in the definition of electronic services: educational services, games, online auction services, miscellaneous services and subscription services. The South African VAT legislation draws no distinction between B2B and B2C supplies of electronic services. The reasoning behind this was to avoid situations in which private customers could pose as business customers in order to avoid the levying of tax. A review of the services currently included in the Minister’s regulation on electronic services indicate that services that would relate to B2B supplies have mostly been excluded from the regulation. Effectively the South African VAT legislation manages to indirectly exclude B2B supplies from the definition of electronic services and therefore achieves the objective of minimising the administrative burden on B2B supplies.

A research report submitted to the Faculty of Engineering and the Built Environment, University of the Witwatersrand, Johannesburg, in partial fulfilment of the requirements for the degree of Masters of Science in Engineering by advanced course work and research, March 2017 / It is estimated that US$50 Billion is attributed to illicit financial outflows from Africa each year. This has created an environment in which African tax administrations have placed political pressure on industry and in particular the mining sector, to account for this erosion of tax bases across the African continent. Transfer pricing abuse by multinational enterprises in the mining industry has been attributed to a large portion of these illicit outflows. This report sets the objective of understanding African transfer pricing challenges, both general and mining specific, as well as initiatives addressing these challenges so as to identify the subsequent synergies and gaps that exist between the two. The following general challenges related to transfer pricing on the African continent were identified namely; effective policy and legislation addressing transfer pricing, sufficient skills and capacity in tax administrations, effective document requirements pertaining to transfer pricing transactions, access to comparable data databases and exchange of information between tax administrations. In addition to these general challenges, two mining specific challenges were identified namely; the complex nature of vertically/laterally integrated mining value chains and inadequate understanding by tax authorities of mining related transactions along the value chain in terms of function, asset and risk of each transaction. Of the six initiatives identified in the literature, the World Bank Group and Centre for Exploration Targeting sourcebook on transfer pricing in African Mining as well as the African Tax Administration Forum tax programs were selected through an Analytical Hierarchy Process as being the best aligned to deal with the challenges mentioned. Synergies between these two initiatives were identified in the areas of transfer pricing policy and legislation alignment as well as transfer pricing skills and capacity building. Gaps were identified under the practical ability to implement the outcomes from the World Bank Group sourcebook which requires a centralised body and multinational transfer pricing model positioned and able to carry out the transfer pricing recommendations from the sourcebook such as effective audits and skills and capacity building programs. The report concludes with a basic framework of how such a Multi-National Transfer Pricing Unit under ATAF might function, as a possible solution to addressing this gap. / CK2018

A divisive reorganization involves a series of transactions having as effect and purpose the division of the trading activities carried on by a single company or group of companies between two or more companies or groups of companies. This can be achieved by a sale of assets or by a transfer of shares belonging to the corporation to be divided, which would generally give rise to taxable capital gains. / The thesis analyzes the tax implications of these two approaches, with particular focus on the latter, attempting a comparative view over the UK and Canadian relevant provisions. The two substantive chapters present the UK and, respectively, Canadian rules governing the treatment of disposal of corporate assets and shares, the available reliefs from capital gains taxation, as well as the special requirements for achieving tax-free demergers. Conclusions are aimed at suggesting a more simplified approach for Canadian divisive reorganizations, with a greater degree of codification.

Value-Added Tax (VAT) is an indirect tax levied on the supply of goods and services. Governments raise revenue by collecting VAT in order to facilitate the maintenance of basic services for the general population. Challenges in VAT collection arise from the supply of digital goods to consumers by means of e-commerce transactions. Moreover, VAT collection mechanisms that do not adequately cater for the collection of VAT on the supply of digital goods results in under-taxation and VAT fraud. The use of an intermediary is a more effective method of collecting VAT on e-commerce transactions since it shifts the compliance burden away from foreign online businesses. VAT legislation should be amended to cater for the collection of VAT by intermediaries. / Mercantile Law / LL. M. (Tax Law)

The main objective of the study was to analyze the potential tax collection from the informal rental housing market in Zambia, using household level rental housing data collected for the Lusaka Urban District by the Central Statistical Office (CSO) as a basis for computation and extrapolation to the national level. This data was used to analyze household monthly expenditure on housing (rent), the total number of households in rented accommodation, and the tax regime applicable on rental income, to estimate the potential tax revenue that could be realized from this emerging sector. The estimates indicate that about K9.7 billion revenue could be collected on income from rental housing in Lusaka Urban District alone and a total of K83 billion nationally per annum. This represents about 0.4 percent of the country’s GDP in 2007. Compliance needs to be improved and legislation revised to ensure that the landlords are compelled to remit tax to the Zambia Revenue Authority. The current legislation makes enforcement and compliance difficult as it places the statutory tax burden on tenants, who are very mobile. It is, therefore, recommended that the landlord is made responsible for the payment of taxes due on rental income and that any compliance requirements be enforced against the real estate/property that is generating the income. This study also examines the performance of the presumptive taxation regime in Zambia The study uses data from the Zambia Revenue Authority on revenue collection from presumptive taxes which were introduced to capture income from the informal sectors. The presumptive taxes already introduced in Zambia include: base tax, advance income tax and turnover tax for minibuses and taxi operators. To analyze the performance of the presumptive tax regime, the study utilizes data on imports made by those not registered for taxes, to estimate how much revenue could be generated by imposing a 3 percent turnover tax on the value of their imports at importation. The analysis shows that the Zambia Revenue Authority increased revenue collection from K5.3 billion in 2004 to K33.5 billion in 2007. This improvement in revenue collection is far below the potential, however, which is estimated at over K501 billion on imports of unregistered traders alone. To collect this revenue and expand the tax base, the tax authority needs to improve the administration of advance income tax on unregistered importers, and raise the advance income tax rate to a level where the importer is indifferent between paying the advance tax at the border and paying turnover tax inland.