Legal Articles and Guides

The Treasury has proposed to remove the foreign employment income tax exemption for South African residents working abroad from March 2019. Treasury deputy DG Ismail Momoniat said the aim was to make sure that the tax system was fair to all and that people did not exploit offshore tax havens.

Taxpayers will in future have to appear in person at a branch office of the SARS if any of their details registered with the agency change. In the past this verification was necessary only when the taxpayer’s banking details changed. However, they will have to visit a branch if a telephone number or an address changes, notes a Moneyweb report.

Government’s decision to increase the rate of a dividend withholding tax and apply it from 22 February 2017 when the Budget Speech took place creates tax uncertainty, Parliament was told yesterday, according to a Fin24 report. The Standing Committee on Finance hosted public hearing on the Rates and Monetary Amounts and Amendment of the Revenue Laws Bill, which will enable tax rates changes announced during the 2017 Budget.

A recent SCA tax case demonstrated quite clearly how paying tax under a ‘statutory obligation’ might seem ‘unfair’, but that there was nothing ‘unjust’ about it, says a report in Business Report. In this case the taxpayer – a company – sold a property for a huge gain, was taxed on the capital gain, but was not paid the total amount. However, the company remained liable for the original capital gains tax assessment.

An unexpected R5.4bn dividend tax windfall enabled SARS to hit its target for the latest tax year, despite shortfalls in other taxes – which a Business Day report says raises questions about what might come to SARS’ rescue as it works to meet even tougher targets in the coming year.

The unexpected retroactive increase in dividend tax has caused consternation among listed companies that have declared but not yet paid dividends, says a Business Day report. On Friday, a slew of companies that have recently declared dividends were forced to issue Sens announcements informing shareholders the after-tax dividend paid out would be reduced in line with the budget announcement.

Anglo American’s disposal of its stake in SA’s largest iron ore producer became easier on Friday, when Kumba Iron Ore agreed to a R2.5bn settlement with SARS – a penalty much smaller than feared. A Business Day report notes Anglo is in the throes of a major portfolio restructuring as it sells off assets in bulk commodities to repay billions of dollars in debt and to focus the business on platinum, copper and diamonds.

The South African National Treasury is moving forwards with their promises to tighten up the income tax laws which are applicable to trusts, which relate specifically to instances where trusts have been granted interest-free or low-interest loans by individuals.

You sell your property for a good price and, with the deal in the bag, you start daydreaming about how to spend the proceeds. Then – disaster of disasters – you realise that in the excitement of the sale you forgot all about VAT.

The knives are out for Finance Minister Pravin Gordhan, who is not only facing possible arrest by the Hawks tomorrow – he has been asked to present himself at their offices in connection with the alleged ‘rogue unit' at SARS – but is also the centre of what a News24 report describes as ‘a massive new forensic probe into deals concluded during his tenure at the organisation’.

SARS paid financial services firm KPMG R23m to investigate allegations of irregularity and misconduct involving the so-called ‘rogue unit’ established to investigate tax evasion, says a BDlive report. This was in addition to the R332 177 spent to finance the work of the Kanyane committee and the R3m paid to the Sikhakhane Panel, both of which were mandated to investigate allegations against former SARS employee Johann van Loggerenberg, who was involved with the unit.

The battle between former Justice Minister Penuell Maduna and his ex-wife escalated this week, with Nompumelelo Maduna claiming he had ‘concocted’ a story to get out of sharing the millions from his empowerment deal with his family, says a Sunday Times report. Nompumelelo filed court papers in response to an urgent application by Penuell in the Gauteng High Court (Pretoria) last month, in which he claimed she was trying to dupe him out of his R10.8m portion of Sasol dividends.

Despite an extensive two-year tender process, three private security companies still managed to secure multimillion-rand City of Cape Town contracts on the basis of fraudulent Tax Clearance Certificates, the Western Cape High Court has found, according to a Weekend Argus report. So serious were the findings made against Okuli Security Services, Comwezi Security Services and Command Security Services SA, that Acting Judge Michael Donen saw fit to grant a punitive costs order against them.

The Panama leaks, last year’s HSBC leaks, and OECD’s “Automatic Exchange of Information initiative” all suggest that South African residents with accounts and investments in foreign tax jurisdictions should ensure that they are fully compliant with all their local and international tax and exchange control obligations.

VAT is a tax that is levied in terms of the VAT Act on the value that is added by each vendor in the production chain of goods and is imposed each time a taxable supply of goods or services takes place. Each vendor is required to account to SARS for the VAT on the value which the vendor added to the good. While a VAT vendor is required to account to SARS for "output tax" on any taxable supplies made by the vendor, the VAT vendor is entitled to deduct from this accounting any "input tax" incurred by the vendor. The effect is that the VAT vendor only pays to SARS the VAT on the value which the vendor added to the good.