Webber Wentzel - Tax RSS Feed

Constitutional Court confirms Vat zero-rating does not apply to recycled or second-hand gold

The Constitutional Court has handed down a unanimous judgment that definitively settles the VAT treatment of gold supplied to the South African Reserve Bank (SARB), the South African Mint Company (SA Mint) and registered banks.

Why diesel rebate claims are lost on compliance documents

Four recent judgments show SARS targeting compliance failures rather than the underlying activity.

Certainty in transfer pricing is closer

SARS has released its much-anticipated additional guidance on the Advanced Pricing Agreement (APA) programme, complementing the legislation issued in 2023.

BGR 16 and the dividend trap: What operating companies need to know

Most operating companies that receive dividends assume that their value-added tax (VAT) position is straightforward. The business makes taxable supplies, VAT on expenses is fully deductible, and the dividend arrives exempt. Binding General Ruling (VAT) 16 (Issue 3), effective for all financial years commencing on or after 1 January 2024, changes that assumption. Importantly, BGR 16 is mandatory, unless SARS has agreed a different apportionment method.

When ignorance is no defence and tax benefit need not be obtained directly: the Constitutional Court's GAAR judgment in Absa

The Constitutional Court's judgment in Absa Bank Ltd and Another v Commissioner for the South African Revenue Service [2026] ZACC 15, handed down on 22 April 2026, is the first interpretation of the General Anti-Avoidance Rules (GAAR) in sections 80A to 80L of the Income Tax Act 58 of 1962 at this level since those provisions were introduced in 2006.

Pay now, argue later - but only if SARS pays attention

The judgment in Ferreira v CSARS (2024/067035) [2026] ZAGPPHC 47, delivered on 2 February 2026, confirms two propositions of immediate practical value. A section 9(1) reconsideration request under the Tax Administration Act is a strategic step that creates a reviewable record capable of addressing deficiencies in SARS' original reasoning.

Bridging accounting and tax: How IFRS is shaping South Africa's tax law

Although tax legislation and accounting standards serve distinct purposes and have historically evolved separately, South Africa's tax legislation increasingly reflects the influence of International Financial Reporting Standards (IFRS).

SARS wins at the Constitutional Court - then changes the rules: The Medtronic interest relief saga

In a striking twist of tax policy, the 25 February 2026 Budget Speech announced a proposed legislative amendment that appears to directly contradict the position that the South African Revenue Service (SARS) pursued all the way to the Constitutional Court, at significant cost to the taxpayer, Medtronic International Trading S.A.R.L. and ultimately to the fiscus.

Beyond ADR - why patience isn't always a virtue

While the alternative dispute resolution (ADR) process is intended to be a faster and more cost-effective resolution mechanism, its 'without prejudice' nature carries significant implications. Any positions taken or concessions offered during ADR discussions do not legally bind the parties in subsequent litigation.

Remote work and PE: What the OECD’s new framework clarifies, and what it leaves unresolved

The OECD Commentary on the Model Tax Convention (Commentary) November 2025 guidance on home office permanent establishment (PE) clarifies when a home or remote location may constitute a fixed place of business PE under Article 5(1).

Interim relief granted on tax compliance requirements for dividend, interest and fee payments to non-residents

SA Reserve Bank’s Circular 15 introduces stricter tax compliance rules for payments to non-residents, including dividends, fees, rentals, and trust distributions, prompting immediate concern from market participants.

Taxpayer TAT: What the test case interlocutory judgment means for ETI disputes

The Tax Court has refused SARS's application to amend its rule 31 statement in the ETI test case that will determine the outcome of ETI disputes faced by over 400 employers. The judgment raises questions about who bears the cost when SARS causes delays.

Navigating Phase Two of the Carbon Tax: Amendments, Allowance Reform and Offset Expansion

Phase Two of the carbon tax will be implemented from 1 January 2026 until 31 December 2030 (Phase Two).

Beyond UMK (CC): A "good cause" for High Court tax litigation

The Constitutional Court (CC) in United Manganese of Kalahari (Pty) Limited v CSARS and Others (CCT 72/24) (31 March 2025) (UMK) has fundamentally reshaped the jurisdictional framework for High Court tax litigation in South Africa. The judgement replaced the current restrictive "exceptional circumstances" test in section 105 with a more flexible "good cause" standard, creating new strategic opportunities for litigants.

From headline to effective: Navigating phase two with offsets as a tax asset

The carbon tax (as defined in section 1 of the Carbon Tax Act 15 of 2019 (CTA) is a tax on the carbon dioxide (CO2) equivalent of greenhouse gas emissions. It is imposed in terms of section 2 of the CTA at the applicable carbon tax rate, which escalates annually in the amounts as set out in section 5 of the CTA.

Bitcoin vs. 1961: Why South Africa's Crypto Crackdown Just Hit a Legal Wall

When the Supreme Court of Appeal (SCA) hears the appeal of the High Court’s Standard Bank v SARB decision in 2026, the court will determine whether the 1961 Exchange Control Regulations (Regulations) can be stretched to apply to a borderless, digital asset such as Bitcoin.

The mythical life of a South African taxpayer

If South African tax were a fable, it would feature three enduring characters: the weary taxpayer, the watchful SARS, and the elusive concept known as certainty. All three appear in our legislation, but only one consistently shows up in practice — SARS.

Beyond the contract: HR Focus and the commercial reality test

The recent High Court judgment in CSARS v HR Focus CC fundamentally clarifies when payroll administrators become liable for skills development levies (SDL) and value-added tax (VAT).

The VAT advantage: smart tax moves for vendors in the food and beverage industry

For enterprises in South Africa that operate within the dynamic food and beverage industry, understanding and effectively utilising indirect tax incentives are a powerful way to enhance profitability and gain a competitive edge.

Webber Wentzel named Tax Law Firm of the Year (South Africa) at the ITR EMEA Tax Awards 2025

Webber Wentzel has been recognised as Tax Law Firm of the Year (South Africa) at the prestigious International Tax Review (ITR) Europe, Middle East and Africa (EMEA) Tax Awards 2025 – held at The Londoner Hotel, London on 18 September 2025 – marking the fifth time the firm has received this honour.

National Treasury’s vicious crackdown on CIS tax avoidance

National Treasury has proposed three major amendments affecting portfolios of Collective Investment Schemes (CISs) in the draft Taxation Laws Amendment Bill, 2025 (TLAB).

New draft tax bill hides a "stealth tax" in your unit trust investments

For millions of South Africans, a unit trust or a portfolio of a Collective Investment Scheme (CIS) is one of the pillars of their financial future, serving as a vehicle for retirement savings, children's education funds, and long-term wealth creation.

A seismic shift: Proposed section 8E amendments threaten decades of corporate funding structures

The South African corporate finance landscape stands on the precipice of a seismic shift due to the proposed amendments to the anti-avoidance sections of 8E and 8EA in the draft Taxation Laws Amendment Bill 2025 (TLAB).

Taxpayers face stricter rules for understatement penalties

The annual draft tax bills recently circulated for comment by the National Treasury and the South African Revenue Service (SARS) contain contentious proposed amendments to the understatement penalty (USP) regime.

A few key insights into the Woolworths SCA judgment

In the recent Woolworths Supreme Court of Appeal judgement, Woolworths Holdings Limited (Woolworths) had incurred significant VAT on professional fees for a rights offer to fund the acquisition of the Australian retail store business, David Jones.

Major tax proposal impacting preference share funding announced

Section 8E (together with section 8EA) of the Income Tax Act deals with the so-called hybrid equity regime.

Understanding the implications of capital gains tax on convertible preference shares

Convertible preference shares (convertible prefs) are gaining traction as a flexible financing tool for companies looking to raise capital while offering investors a hybrid position—part protection, part upside.

SARS is stepping up enforcement - is your business audit ready?

SARS is significantly increasing its tax enforcement efforts, with billions allocated to new technologies, expanded audit teams and greater scrutiny across all sectors. These changes are already in motion and are expected to intensify in the coming months.

Webber Wentzel shortlisted in 20 categories for the 2025 African Legal Awards

Webber Wentzel has been shortlisted in 20 categories for the 2025 African Legal Awards, a recognition that reflects the firm’s depth of expertise and impact across the African legal and business landscape.

The 2024 amendments to the foreign tax rebate

On 24 December 2024 the Taxation Laws Amendment Act 42 of 2024 was promulgated. It contained three amendments to s 6quat (the rebate for foreign taxes). Two of these affected limitations on the rebate pertaining to foreign capital gains, while the third dealt with an amendment to the rule for translating foreign taxes of a controlled foreign company (CFC) to rand.

Transacting with oneself

This article examines the tax implications of transactions between branches, the consequences of individuals claiming the value of their labour as a deduction, and the implications of debtors acquiring their own debt. References to ‘para’ are to paragraphs of the Eighth Schedule to the Income Tax Act 58 of 1962 (Act) and references to ‘s’ are to sections of that Act unless the context otherwise indicates.

Set-off of ring-fenced assessed loss against taxable capital gain on disposal of immovable property

Section 20A was inserted into the Income Tax Act 58 of 1962 (ITA) and applies to the 2005 and subsequent years of assessment. It applies to individuals whose taxable income places them in the highest tax bracket before considering any assessed loss or balance of assessed loss brought forward from the previous year of assessment.

Electronic Services – New Regulations usher in a new dispensation – but do they work?

The long-awaited Regulations introducing a general business-to-business (B2B) exclusion (although in this case a business-to-registered vendor exclusion) for the electronic services supplied from outside South Africa to specified recipients within the country were issued on Friday, 14 March 2025. The changes come into effect on 1 April 2025.

Supreme Court of Appeal judgment encourages capital investment by mining companies

Tax policies influence investment decisions. To incentivise miners, the Income Tax Act allows mining companies to claim deductions for mining capital expenditure, commonly referred to as 'mining capex'.

The Thistle Trust v C: SARS – the Constitutional Court has spoken

On 2 October 2024, after an excruciating delay of eight months, the Constitutional Court finally delivered its judgment in the matter of The Thistle Trust v C: SARS. The judgment spans 59 pages and was a majority (6/8) decision with two dissenting judges.

VAT rate increase: Key considerations for businesses ahead of May 2025

The 2025 Budget tabled by Finance Minister, Enoch Godongwana in Parliament on Wednesday, 12 March 2025, saw the 2% VAT increase initially proposed in February 2025 replaced by two consecutive 0.5% increases, bringing the VAT rate to 16% in the 2026/27 financial year.

Government and revenue: VAT delayed the budget, but an increase is still likely

The 2025 Budget will be historic not for one but two significant reasons. The first is the Government of National Unity (GNU) embodying democracy in action, the first time the Budget has been delayed in South Africa’s post-apartheid history.

South Africa is making moves to become an important EV manufacturer in the future

A year ago, South Africa was mired in loadshedding, with the importance and relevance of electric vehicles (EVs) far from the public imagination. How can a country that struggles to keep the lights on dedicate time and resources to building out an EV future?

Webber Wentzel celebrates its Chambers Global 2025 rankings

Webber Wentzel has once again affirmed its position as a leading law firm in South Africa with outstanding results in the Chambers Global 2025 rankings. The firm has secured 15 Band 1 category rankings, maintaining its status as the top-ranked Band 1 firm in the country.

Treasury companies

The term ‘treasury company’ is used here to refer to a subsidiary of a holding company that holds its holding company’s shares. This arrangement has some tax advantages but there are also some pitfalls that need to be borne in mind.

Partnership pitfalls

En commandite partnerships are back in vogue today as an investment vehicle for investors to take advantage of the solar incentives in ss 12B and 12BA of the Income Tax Act 58 of 1962 (Act). However, if not structured properly, they may not produce the desired outcome. In some instances, the law is unclear and in others it can impose an uncommercial burden on an investor.

Backdating

The question of backdating frequently arises in practice and it is important to understand when it is acceptable and when it is not.

Non-resident beneficiaries of resident trusts and the 2023 amendments to s 25B

The Taxation Laws Amendment Act 17 of 2023 made changes to s 25B(1) and (2) of the Income Tax Act 58 of 1962 (Act) that have profound tax implications for resident trusts with non-resident beneficiaries. The amendments apply to the 2025 and subsequent years of assessment and commenced on 1 March 2024.

Interest payable to SARS

Section 272 of the TAA deals with short title and commencement and provides that the TAA comes into operation on a date to be determined by the President in the Gazette. This is proclamation 51 in Government Gazette 35687 of 14 September 2012.

Clarity on how multi-tier trust distributions of capital gains should be taxed

The Constitutional Court (CC) handed down judgement on The Thistle Trust v Commissioner for South African Revenue Service CCT 337/22 on 2 October 2023.

SARS increases customs duties for online retail orders: what you need to know

The clothing and textile industry has faced widescale criticism for controversial Environmental, Social and Governance (ESG) practices. South African consumers may imagine themselves to be far from the hub of these issues, but we are all participants in the global supply and demand for fashion.

Webber Wentzel recognised at the 2024 African Legal Awards

Webber Wentzel's excellence in Competition, Intellectual Property and Tax law, combined with an innovative approach to legal services, was recognised at the 2024 African Legal Awards held at the Houghton Hotel on Friday, 6 September 2024.

The definition of person’

The definition of ‘person’ in the Income Tax Act 58 of 1962 (ITA) and other taxing statutes forms a critical component of their charging provisions. If the target of the tax is not a person, no tax can be charged even if that target has a representative.

The final energy incentive legislation

On 22 December 2023 the Taxation Laws Amendment Act 17 of 2023 was promulgated. It contained the final versions of the renewable energy incentive legislation which I wrote about when it was still in its draft form in the July 2023 issue of ASA. Happily, the final legislation has ironed out many of the gremlins that were in the draft legislation.

Prescription and settlement agreements

SAICA recently made an Annexure C submission on the problem of the prescription of assessments which are the subject of follow-on adjustments involving a dispute in an earlier year of assessment.

Waiver of intra-group loans and the 2023 amendments

The Taxation Laws Amendment Act 17 of 2023, which was promulgated on 22 December 2023, contains two almost identical amendments to s 19 of the Income Tax Act 58 of 1962 (Act) and paragraph 12A of the Eighth Schedule to the Act, which deal with the concession or compromise of a debt.

Asset-for-share transactions: The number of shares conundrum

Section 42 of the Income Tax Act 58 of 1962 (Act) deals with asset-for-share transactions. It provides roll-over relief for persons wishing to transfer assets to a company in exchange for an issue of shares. But how many shares must the transferee company issue in exchange for an asset or assets?

Usufructs: Understanding the 12% discount rate and annual right of enjoyment

It is not uncommon to see usufructs, particularly in wills. These provide one person with the use of an asset (generally a spouse) over their lifetime or a defined period and another (often a child or trust for the children)with the 'bare dominium' in the asset. At the end of the usufruct period or death of the usufructuary, it falls away and the bare dominium holder has the full use of the asset. The usufruct is an asset and has to be valued, be it for capital gains tax, donations tax, estate duty, or transfer duty purposes.

Shortlisted for excellence: Webber Wentzel among frontrunners for the 2024 African Legal Awards

Webber Wentzel has been shortlisted in an impressive 19 categories at the prestigious African Legal Awards. This recognition underscores the firm's commitment to excellence and its leading role in the African legal landscape.

Can an individual who is an "employee" for PAYE not be an "employee" for VAT or ETI?

The question of what is an "employee" for purposes of claiming the employment tax incentive (ETI) will be the subject of a test case at the Tax Court from 20 to 24 May 2024. Hundreds of employers under audit or in disputes with the South African Revenue Services (SARS) wait with bated breath for the outcome of this case where SARS argues that an employer only qualifies to claim ETI for individuals who "worked for" the employer

Claiming medical tax credits for dependants

With the increasing cost of living, taxpayers often find themselves in the unenviable position of having to fund the medical expenses of family members such as a parent, grandparent, sibling, uncle, aunt or cousin.

Webber Wentzel recognised as a top-tier firm by The Legal 500

The Legal 500 Europe, Middle East & Africa (EMEA) 2024 guide has recognised Webber Wentzel as a top-tier firm. Notably, Webber Wentzel has been ranked as the leading law firm with the most Tier 1 rankings compared to all other firms ranked in South Africa, a status it has maintained for the past 11 years.

Improvement or enhancement in the value of an asset when determining its base cost

Paragraph 20(1)(e) of the Eighth Schedule to the Income Tax Act 58 of 1962 allows the cost of the improvement or enhancement in the value of an asset to be added to its base cost for capital gains tax (CGT) purposes. On the face of it, it seems like a fairly simple provision, but there is more to it than meets the eye.

Unlisted shares and deceased estates

This article examines some of the estate duty, capital gains tax (CGT) and dividends tax issues that arise when a person dies holding unlisted shares.

Revaluing trust assets to avoid capital gains tax

Binding private ruling (BPR) 342 dated 30 April 2020 ‘Donation by a resident to a foreign trust of property received from another foreign trust’ is particularly interesting because it revealed a novel way, at least to me, of avoiding capital gains tax (CGT).

Contributed tax capital and the provisos

The Taxation Laws Amendment Act 20 of 2022 substituted the further proviso to the definition of ‘contributed tax capital’ in section 1(1) of the Income Tax Act 58 of 1962 (Act). The further proviso had been inserted by the Taxation Laws Amendment Act 20 of 2021 and was scheduled to come into operation on 1 January 2023. This article explores the background to the provisos and how they operate in relation to CGT and dividends tax.

Estate duty and the succeeding usufruct

This article examines a variation of the bare dominium/usufruct arrangement employed by estate planners to avoid estate duty. It involves the creation of a succeeding usufruct for a limited period after the death of the second-dying spouse who is the initial usufructuary.

Godongwana teetering on the highwire

Over the last few years there have been calls on the government to curtail its spending, prune its bloated cabinet, and stop bailing out badly managed state-owned entities. This year’s budget demonstrates that the government has heeded these calls.

Capital reconciliations

In its annual report for the year ending 31 March 2022 SARS indicated that it had undertaken 25 lifestyle audits with a value of R474,7 million. These audits involve mainly using capital reconciliations and third-party data and focus mainly on individuals who have access to luxury assets and extensive business relations.

Budget 2024 – navigating uncertainty in challenging times.

Minister of Finance Enoch Godongwana will deliver the 2024 Budget Review to Parliament next week as the South African economy faces a gloomy economic outlook. The economy is still recovering from the impact of COVID-19 and state capture.

Navigating tax deductions: Lessons from the Unitrans Holdings case

The Gauteng High Court recently dismissed the appeal of Unitrans Holdings (Unitrans) against the Tax Court judgment which had denied a tax deduction for interest incurred. The court found that the interest incurred was not closely connected to Unitrans’ business operations as an investment holding company and that the purpose of the interest was not to produce income but to further the interests of the subsidiaries.

More exit charge issues

Ceasing to be resident can have some harsh tax consequences, including potential double taxation despite the presence of a tax treaty. This article also examines the amendment to the annual exclusion in the Taxation Laws Amendment Act 20 of 2022.

C: SARS v The Thistle Trust – The Supreme Court of Appeal puts paid to distributions of capital gains through multiple discretionary trusts

The Oxford online dictionary defines a thistle as a widely distributed herbaceous plant of the daisy family, which typically has a prickly stem and leaves and rounded heads of purple flowers.

Navigating the scarcity of funding in the Mining Industry

The mining industry is a pillar of global economic development, providing essential raw materials for various industries while also actively participating in the drive towards a circular and sustainable global economy.

Section 12BA – Light at the end of the tunnel?

National Treasury has released proposed amendments to the Income Tax Act to encourage taxpayers to invest in alternative energy generation as a matter of urgency.

The Challenge of Change: Unpacking Onerous Adjustments to the apportionment formula

The shortcomings of the VAT apportionment formula set out in 2011, have been addressed in a new formula which applies with effect from all financial years commencing on or after 1 January 2024. We highlight important adjustments to the formula which is laid out new Binding General ruling, BGR 16 (Issue 3).

Two-pot system effective date - 1 September 2024?

Discussions with the National Treasury, SARS, FSCA, GEPF and the Government Pensions Administration Agency have indicated that the date proposed by the Minister of 1 September 2024 would be achievable.

Recent legal developments relevant to Private Equity

In this overview, our experts highlight and provide insights on recent legal developments in tax, corporate, B-BBEE, competition, financial regulatory, projects, and employment that are relevant to private equity.

Tax deductibility of ESG-related expenses

The sustainability of economies and in turn, society, largely hinges on how well we adopt Environmental, Social, and Governance (ESG). Given that naturally this comes at some cost, the tax deductibility of related expenses comes into focus.

National Treasury accommodates many public comments on the two-pot retirement system proposals

National Treasury has amended its original proposals on the two-pot retirement system, taking public comments into account, including a later implementation date of 1 March 2025.

Venture Capital Investment Structures in Mauritius: Protected Cell Companies and Variable Capital Companies

Unlocking Investment Potential: Mauritian Protected Cell Companies and Variable Capital Companies offer ringfencing advantages for fund managers and investors.

Webber Wentzel wins coveted tax awards

Webber Wentzel's excellence in providing depth and market-leading tax advice service has once again been recognised by the International Tax Review (ITR).

Tax laws amendment ignores global business outsourcing realities

Proposed amendments to the tax laws, following the Coronation SCA judgment, will make it very difficult for controlled foreign companies with foreign business establishments to outsource functions.

SARS invites comments on how to modernise VAT data collection

SARS has published a discussion paper on its intended modernisation of the VAT collection system, which will ultimately make VAT reporting faster and more transparent.

When are government restrictions arm's length? A lesson from 3M!

A recent tax case involving payments by a Brazilian affiliate of 3M for IP it was licensed to use has cast some light on the complexities of determining an arm’s length price for intra-group services

New draft rules on the proposed two-component (two-pot) retirement system

The anticipated draft amendments to legislation that will implement the first phase of the two-component retirement system have been published for comment.

Trusts and PBOs now required to file third-party returns to SARS

SARS has published the notice requiring trusts and section 18A entities to file third-party returns, which will be used to pre-populate tax returns.

Phala Phala Saga and the public interest override

The recent Constitutional Court ruling in Arena Holdings (Pty) Ltd t/a Financial Mail and Others v South African Revenue Service puts pressure on President Cyril Ramaphosa to reveal the tax records of the Tshivhase Trust, owner of Phala Phala.

The tax implications of exporting excess electricity to the municipality

South Africa’s energy supply system is in flux. While this is causing some pain, it is also opening up new income-earning opportunities for those with the capital to spend on installing solar PV or wind generation facilities at their homes or premises.

Exchange controls in Africa - Some limitations to be aware of

A country’s rules on exchange control and the accessibility of foreign exchange should be important considerations for those considering doing business in a new jurisdiction.

Webber Wentzel embraces Generative AI as part of its ongoing innovation journey

Webber Wentzel is taking the lead on responsible Artificial Intelligence (AI) investment within the African legal landscape as part of its continued commitment to deliver an exceptional client experience and foster an open, creative, and entrepreneurial culture.

Tax incentive for rooftop solar – A proverbial two birds, one stone?

The South African Reserve Bank estimated that the rolling blackouts hitting South African businesses and households cost the economy approximately ZAR 900 million a day.

National Treasury takes proposed two-pot retirement system forward

Revisions to the draft legislation on the “two-pot” system for retirement funds were published on 9 June 2023, incorporating proposals mentioned in Chapter 4 of the 2023 Budget Review

Supreme Court of Appeal strikes out the Mandatory Audit Firm Rotation Rule

In a significant judgment for the auditing profession, the Supreme Court of Appeal has ruled that the Independent Regulatory Board for Auditors did not have the power to mandate audit firm rotation

Tax deductions for residential solar power systems

The other day there was a lot of hammering, grinding, drilling and shouting emanating from the roof of my neighbour’s house.

Skirting the Tax Court is not a quick-fix solution to a tax dispute

The road to finalising a dispute against an additional assessment or a SARS decision can be a "protracted slog" to the Tax Court. Recent case law suggests that relief in the High Court is only available in exceptional circumstances.

Deduction of income tax and CGT when calculating estate duty

The net value of an estate for estate duty purposes may be reduced by income tax, CGT payable on the sale of assets by the executor, and income tax on the sale of trading stock.

Self-generated goodwill and CGT

Self-generated goodwill has to be valued when a business is sold as a going concern, and if it commenced before 1 October 2001, the time-apportionment method of valuation can be used.

Contributions to employee share incentive trusts

The contributions that companies make to employee share trusts should be tax deductible if they are made to incentivize employees but, if there are other benefits, there may be a capital gains liability.

Share buy-backs

The tax implications of share buybacks by companies are complex for both the company and its shareholders, and harsh penalties may be levied for non-compliance.

South Africans bask in new tax breaks for solar power

Government has announced temporary incentives for residential and business solar PV installations to help boost South Africa’s energy generation.

Foreign employers will be required to register with SARS

National Treasury proposed in the February 2023 Budget that it intends to align the obligations on South African and foreign employers, which creates certain practical issues.

23 legal developments to track in 2023

Various legal developments that will impact South African business operations are expected to unfold in 2023, particularly in the fields of tax, ESG, financial regulation and economic transformation.

New tax dispute resolution rules come into effect immediately

New tax dispute resolution rules provide for, amongst others, 80 days to submit an objection and more independence of an ADR facilitator.

South Africa has been greylisted; what are the implications for the country going forward?

South Africa’s greylisting by the Financial Action Task Force (FATF) has significant implications for its economic growth and global competitiveness, but moves are already being taken to satisfy the FATF

Budget 2023 gives relief to hard pressed South African taxpayers

The National Budget delivered today by South Africa’s Minister of Finance, Enoch Godongwana, showed that government is making some significant financial commitments to restore Eskom to viability and to maintain social grants.

Resource nationalism can create uncertainty and strangle mining investment

Short-term gains can result in a longer-term loss of investment when governments impose too many demands on mining companies.

Webber Wentzel recognised as 2022 South Africa Law Firm of the Year by Top Ranked Legal

Webber Wentzel has been awarded the 2022 South Africa Law Firm of the Year in the EMEA Awards by Top Ranked Legal.

Income Tax and VAT - Mining of Crypto Assets | Tax Chronicles

Crypto assets can be earned as rewards from proof of work or proof of stake mining, and the tax payable in respect of each activity may be different.

Resolving customs and excise disputes with SARS - litigation [Part 4 of 4 part series]

There are various mechanisms to resolve disputes with SARS' Customs and Excise divisions. In this article, we consider the final mechanism: litigation against SARS.

Uneven barter transactions

Case law gives guidance on the correct values to be used for tax purposes in the event that assets are exchanged for more or less than the market price.

Capital gains cannot flow through multiple discretionary trusts - SCA

A recent SCA judgement has clarified that a capital gain distributed from one trust to a second and then to a natural person beneficiary must be taxed in the hands of the second trust, not the natural person

Webber Wentzel won the African Legal Awards for African Law Firm of the Year

Webber Wentzel has been named African Law Firm of the Year (Mid-Large Sized Practice) at the 2022 African Legal Awards.

SARS (somewhat) lifts prohibition on distributions from resident trusts to offshore trusts

SARS will now consider applications from South African-resident trusts for approval to distribute funds to non-resident trusts.

National Treasury and SARS refine “two pot” retirement proposals in response to feedback

After wide consultation, National Treasury and SARS have made some changes and clarifications to the original proposals on introducing a “two pot” retirement system.

Webber Wentzel won the African Legal Awards M&A Team of the Year

Webber Wentzel won the African Legal Awards M&A Team of the Year for advising on the joint venture between Sanlam Limited, its subsidiaries, and Allianz BV, a subsidiary of Allianz SE.

Webber Wentzel wins prestigious tax awards

Webber Wentzel's tax team has been awarded the South Africa Tax Firm of the Year title at the International Tax Review (ITR) EMEA Tax Awards that were held on 15 September 2022. Amongst the contenders for this title, were Baker McKenzie, Deloitte, ENSAfrica and Werksmans Attorneys.

Ten things you ought to know about SA’s planned two-pot system for retirement savings

Draft amendments have been published to introduce the proposed two-pot system for retirement savings. Here is a summary of the main features.

Airline industry: New Bill has important tax consequences

The National Treasury has published the Taxation Law Amendment Bill. This bill, effective from 1 January 2023 will have important tax consequences for stakeholders in the airline industry.

ESG: Achieving net zero and the role of carbon tax

A reduction in carbon emissions is integral to South Africa's global commitment to achieve net zero. The South African government strategically introduced carbon tax to combat global warming by encouraging a low carbon economy.

Resolving customs and excise disputes with SARS - ancillary dispute resolution mechanisms [part 3 of 4 part series]

There are various mechanisms to resolve disputes with SARS' Customs and Excise divisions. In this article, we consider the uses and value of certain ancillary mechanisms.

The mining of crypto assets has complex income tax and VAT implications

Crypto assets can be earned as rewards from proof of work or proof of stake mining, and the tax payable will be different from each activity.

A minefield of taxes lies ahead for crypto asset transactions

A gain on the disposal of crypto assets may be taxed as either revenue or capital, in line with the same income tax rules that apply to the disposal of shares or unit trusts.

SARS outlines plans to require new third-party data submission from trusts and section 18A institutions

In line with its Vision 2024 to streamline tax collection, SARS will implement new systems for reporting trust distributions and donations to approved institutions.

Linking the "S" in ESG to Employment Tax Incentives

While companies need to focus on their environmental and governance principles to meet their ESG requirements, they should not ignore the integral role of non-financial factors, which make up the "S" in ESG.

Preparing for an investigation into your transfer pricing practices

In this series of articles, we will guide you through the process of dealing with a transfer pricing audit from SARS, what to expect and how to respond to ensure the best outcome.

Importer's obligation to disclose transfer pricing year-end adjustments under the Customs and Excise Act

SARS' Customs Branch and National Targeting Unit have been focusing more extensively on the impact that transfer pricing year-end adjustments have on the value of imported goods. Advance notice of potential adjustments is required in terms of the Customs and Excise Act to avoid penalties.

Farmgate potential tax dilemma: Is the President in trouble with SARS and will the public be allowed to see for themselves?

The nation came to a standstill after allegations emerged that the President may have concealed a robbery at his Phala Phala farm in Limpopo. It is alleged that US$4 million dollars (approximately ZAR62 million) was stolen from the farm, but the theft was never reported to the police.

Legal Issues in the Metaverse - Part 2: Commercial Opportunities

In this Part 2 of our Legal Issues in the Metaverse Series, we focus on the legal considerations for businesses that intend to commercialise opportunities in the Metaverse.

SARS streamlines auto assessments for the 2022 tax filing season

Taxpayers who are satisfied with their auto assessments need not take any further action, under the new procedures introduced by SARS for the 2022 tax filing season.

Capital Raising and Deployment | Insights Series

To mark the culmination of the most recent topic of focus between Africa Legal and Webber Wentzel, we are proud to present a downloadable compilation of content focused on capital raising and deployment.

SARS publishes income tax return filing dates for the 2022 year of assessment

SARS has announced the deadline dates for filing income tax returns for the 2022 year of assessment as well as the details of those exempt from filing returns.

Cancellation of Contracts | Tax Chronicles

Parties wishing to cancel a contract should try to do so within the same year of assessment as it was entered into, to avoid adverse cash-flow consequences.

Legal Issues in the Metaverse - Part 1: The Consumer

We have compiled a series, "Legal issues in the Metaverse", in which we will unpack some of the legal considerations surrounding the Metaverse. In this edition, we are focusing on the Metaverse user (consumer).

Electronic dispute process now available to employers objecting to SARS administrative penalties on late or non-submission of EMP501 declarations

SARS has enabled its current dispute process on eFiling to employers requesting a remission, or objecting and appealing against administrative penalties on late or non-submission of EMP501 Employer Reconciliation Declarations

National Treasury launches the Green Finance Taxonomy Paper

National Treasury has launched South Africa’s first Green Finance Taxonomy, which will help investors and financial institutions make more informed decisions on “green” projects.

22 Legal Developments for businesses to monitor in 2022

We have collated a snapshot of key themes to track in 2022 and of 22 legal developments for the year which you will need to keep a tab on. In 2022, various legal developments are expected to have an impact on businesses, particularly in the fields of liability, ESG, digital and economic transformation.

SARS Vision 2024: greater efficiency in collections, but questions remain

SARS plans to implement Vision 2024 with the objective of collecting taxes from individuals on a real-time monthly basis, but a number of practical issues need to be addressed.

Covid-19 organisations and their donors are in SARS' cross hairs

SARS appears to be reviewing the tax deductibility of donations made after 30 September 2021 to organisations set up to provide economic forms of disaster relief for Covid-19.

Curbing abuse of the Employment Tax Incentive project

Amendments to the Employment Tax Incentive Act, 2013 geared towards halting the abuse of employment tax incentives came into force on 1 March 2022

Good news in Budget 2022 but implementation still the key

On 25 February 2022, Webber Wentzel hosted a client webinar, "Post Budget Speech Panel Discussion | What does the 2022 South Africa budget mean for you and your company?" Panellists at the webinar were Dr Azar Jammine - Director & Chief Economist of Econometrix, Brad Webber, Samantha Pokroy, Brian Dennehy and Julian Jones. Here's some of the insights from the panel of experts.

A measured approach … Budget 2022

Webber Wentzel’s Tax Team welcomed a balanced National Budget presented by Minister of Finance Enoch Godongwana on Wednesday.

New Draft Interpretation Note on Intra-group Financial Transactions brings welcome clarity

SARS has released a new draft interpretation note that will help to clarify issues around intra-group loans, but several key issues still need to be addressed.

Webber Wentzel recognised in Chambers Global 2022

Earlier this year, Webber Wentzel was awarded South Africa Law Firm of the Year at the Chambers Africa Awards 2022. Yesterday, Chambers Global released its 2022 results, ranking law firm practices and lawyers according to their client service, commercial vision, business understanding, diligence and value for money.

The aged usufructuary

Valuing a usufruct for estate duty purposes may incur a greater tax liability than disposing of it while the usufructuary is alive and paying donations tax, transfer duty and CGT.

The tax burden on annuitants: spread, not lightened

The latest move by SARS to require the withholding of PAYE from annuity payments at an "Effective Tax Rate" as required in directives issued to payers of annuities may help some annuitants to plan their finances, but may disadvantage others.

To object or take SARS on review - that is the question

A recent transfer pricing case raised a number of interesting issues about procedure in the event that a taxpayer disputes SARS’s findings following an audit

Webinar Invitation: Post Budget Speech Panel Discussion

Webber Wentzel invites you to a post-budget analysis on the impact on our economy and ultimately how it will affect you and your company.

Are personal rights assets for capital gains tax purposes?

Although personal rights are clearly assets for CGT purposes, they add a layer of complexity which has not been clarified in recent court decisions.

SARS steams ahead with reforms to its VDP process

On 31 January 2022, SARS hosted a public workshop to discuss the draft Voluntary Disclosure Programme Guide and uncertainties about the Voluntary Disclosure Programme process.

Treasury p(l)ots for earlier access to retirement savings and better governance

National Treasury recently published two papers on retirement reforms for public comment, the first proposes a “two-pot” system to improve accessibility and preservation of retirement savings, and the second to improve governance of umbrella funds

National Treasury publishes fiscal policy proposals for the taxation of e-cigarettes

National Treasury is asking for public comment by 7 February 2022 on its proposals to impose a specific excise tax on both the non-nicotine and nicotine solutions in e-cigarettes

Cancellation of contracts revisited – tax insights on the issue

Parties wishing to cancel a contract should try to do so within the same year of assessment as it was entered into, to avoid adverse cash-flow consequences.

South African Law: Year to Come 2022 and Year in Review 2021

Webber Wentzel has contributed to the Linklaters' global guide series - Year to Come 2022 and Year in Review 2021. The series brings together analysis, thinking and highlights from lawyers around the world across multiple jurisdictions, in the form of topic-specific and jurisdictional guides.

Tax consequences of riot insurance payments | Tax Chronicles

Businesses that are able to claim from the South African Special Risks Insurance Association (Sasria) for damage to premises or equipment from the July 2021 unrest need to be aware of the tax implications of payouts.

Proposed model and legislation for an APA Programme in South Africa

SARS has published a draft model and proposed legislation to establish an advance pricing agreement programme and is inviting comments on it by the end of January.

BRPs should note differing due dates when income tax, VAT and payroll tax liabilities arise

Case law and the Tax Administration Act provide clear authority that income tax liabilities arise when the ITA34 assessments are issued by SARS, and for VAT and payroll tax liabilities, on the date the relevant payments and returns are due.

Resolving customs and excise disputes with SARS - alternative dispute resolution [part 2 of 4 part series]

There are various mechanisms to resolve disputes with SARS' Customs and Excise divisions. In this article, we consider the alternative dispute resolution procedure.

Webber Wentzel wins several prestigious awards

Webber Wentzel is proud to announce that the excellence of its tax and corporate teams were recently recognised with prestigious awards, beating several of South Africa’s top legal firms.

Indirect Tax

In a complex and highly regulated space with active enforcement and vigilant authorities, it is essential to have a trusted adviser with in-depth knowledge and commercial insight.

A Journey of Growth and Success

Webber Wentzel Senior Partner Christo Els and Managing Partner, Sally Hutton, chat to Tom Pearson in a podcast focussing on the growth and success of one of Africa’s foremost law firms.

No Doge-ing the tax bill on cryptocurrency transactions

SARS is tightening tax collection on cryptocurrency transactions, which makes it important to distinguish between events that will trigger income tax rates or CGT rates.

A new global taxation regime is in the pipeline – start preparing now

The recent agreement by 130 of the 139 countries participating in the OECD/G20 Inclusive Framework (IF) to implement the two-pillar package will result in a fundamental shift in the way international taxation has worked in the past. It “wipes the slate clean”.

A guide to employers’ tax obligations after damage to their premises

The recent looting and damage to businesses in KwaZulu-Natal and Gauteng has had a devastating impact on many businesses, both small and large. In some cases, the damage is so severe that the business cannot continue to produce or sell, and valuable data may have been lost, including employee and tax records.

The complex tax consequences of riot insurance payments

Businesses able to claim from SASRIA for damage to premises or equipment from the recent unrest need to be aware of the tax implications of payouts

Resolving customs and excise disputes with SARS - internal administrative appeal [part 1 of 4 part series]

There are various mechanisms to resolve disputes with SARS' Customs and Excise divisions. In this article, we consider the internal administrative appeal.

Transferring listed shares to an offshore exchange

The recently-introduced Section 9K to the Income Tax Act triggers a potential tax liability when dual-listed shares are migrated from a South African to an offshore stock exchange.

Highest Court decision has implications for all loyalty programme providers

The Constitutional Court recently handed down judgment on the Clicks Retailers (Pty) Ltd v CSARS case, which has wide ramifications for all loyalty programme providers. Loyalty programme future expenditure will as a result, be claimable only if the obligation for such expenses is imposed in the same income-producing contract.

Some well awaited certainty on Kenyan withholding taxes for inbound services

A recent decision by the Tax Appeals Tribunal of Kenya has provided much needed clarity on withholding tax payable by South African residents providing services to Kenyan entities

Tightening the noose on emigrants' retirement assets | Accountancy South Africa

The Budget Review 2021 includes a proposal to impose a deemed retirement withdrawal tax on retirement assets of emigrants as an exit tax. The proposal is unclear and has numerous issues.

Proposals of interest to employers in the 2021 Budget Review

In the 2021 Budget, there are proposals to halt abuse of employment tax incentives and expand the scope of what constitutes a long-service award

Annuitisation of provident funds finally commences

From 1 March 2021, members of provident funds on retirement will have to buy an annuity with two-thirds of their retirement funding, bringing them in line with pension and RA fund members

Distillate Fuel Refund System Reform: the wait may soon be over

Recently released proposed draft amendments to the diesel refund scheme clarify certain aspects of the scheme, but it remains to be seen whether they will ease some of its more onerous requirements.

Covid-19 TERS extension: key information for employers

A new directive sets out conditions for the extension of benefits under the Covid-19 TERS scheme, which applies only to four categories of employees.

Treasury further tightens the noose on retirement assets of emigrants

The Budget Review 2021 includes a proposal to impose a deemed retirement withdrawal tax on retirement assets of emigrants as an exit tax. The proposal is unclear and has numerous issues.

South Africa - Let's do Business eBook

A tailored and on-the-ground perspective for business in South Africa and those looking to invest in South Africa.

Mboweni sticks to a realistic path in 2021/22 Budget

South African Finance Minister Tito Mboweni delivered the 2021/22 Budget on 24 February that treads a pragmatic path between over-spending and too much austerity, as the economy grapples with the impact of Covid-19 and lockdowns.

Webber Wentzel's expertise recognised by Chambers Global

Chambers Global has released their 2021 results. Webber Wentzel had an exceptional year with key highlights.

21 Legal Developments for businesses to monitor in 2021

We have collated a snapshot of key themes to track in 2021 and of 21 legal developments for the year which you will need to keep a tab on.

Budget 2021: Finding revenue from a highly-taxed base

The South African government is likely to be tempted to increase marginal rates of tax on top earners in the February Budget, but non-tax measures would be more effective in raising funds for the fiscus

Changes to the South African Exchange Control Rules

On 4 January 2021 the South African Reserve Bank released Exchange Control Circular No. 1/2021 which provides for the long-awaited relaxation of the South African exchange control rules relating to “loop” structures and investments.

Covid-19 TERS External Audit and Forensic Process underway

On 27 November 2020, the Unemployment Insurance Fund (UIF) announced that it will be implementing its C-19 External Audit and Forensic Process effective 1 December 2020.

Linklaters' Global Guide: Year in Review 2020 and Year to Come 2021

We have contributed to the Linklaters' global guide series - Year in Review 2020 and Year to Come 2021.

Emigrating? NT confirms 3 years wait to access preservation and RA lump sums

National Treasury proposes to introduce a 3-year rule to replace the financial emigration trigger which allows individuals to withdraw all amounts in their preservation funds and retirement annuity funds before retirement.

Life in a remote world: Tax enforcement in TP

Many businesses have had to change the way they operate as a result of COVID-19, with many activities undertaken remotely.

SARS, stand in line: How tax debts rank in business rescue

A company in financial distress may have a variety of outstanding tax debts at the commencement of business rescue.

Relaxation of loop structures - but at what tax cost?

The envisaged future relaxation of the prohibition on “loop structures” will be accompanied by amended tax laws, but current proposals are likely to result in more tax on certain structures

How to navigate a transfer pricing audit to a mutually acceptable outcome

Transfer pricing audits can be onerous, but taxpayers can achieve a more successful outcome by providing all information requested, anticipating areas of concern, and engaging openly with SARS

Want to withdraw retirement funds on emigration? National Treasury and SARS say try again in 3 years' time

The National Treasury published the Draft Taxation Laws Amendment Bill, 2020 (Draft Tax Bill) for public comment.

Contract mining clarification muddies the water

Proposed amendments to the Income Tax Act limiting capex deductions to mining right holders are likely to have negative consequences, particularly for the junior mining sector

Life in a remote world - tax enforcement in transfer pricing

The unusual business conditions of the Covid-19 outbreak will require a more flexible approach from tax authorities when analysing transfer pricing in the 2020 year of assessment

Domestics and gardeners - claiming TERS and other UIF benefits

Domestics and gardeners who could not work during lockdown – and received no or reduced income - may receive benefits under the Temporary Employer - Employee Relief Scheme (TERS).

Auto-assessments and the shorter tax filing season

This year, taxpayers should be aware that SARS will be assessing a number of non-provisional taxpayers automatically and has also shortened the 2020 tax filing season

Deductions available for commission earners

Commission earners could make an argument to SARS that they should be allowed to deduct their normal range of business expenses, even if commission is no longer more than 50% of their total remuneration under the exceptional circumstances of the Covid-19 pandemic.

OECD release on corporate statistics - an African comparison

The latest OECD report on corporate tax statistics shows, among other things, that African countries are more reliant on corporate tax revenue than OECD member countries

Is SARS fighting illicit financial flows or just checking up on you?

Under new OECD rules, South African residents with offshore bank accounts are required to provide information to their banks to enable the authorities to check their tax compliance.

More (tax) reasons to #stayhome

As more and more South Africans adjust to the new normal of working from home, we examine below whether there are any tax deductions available from doing that.

June applications for C-19 TERS are now open

The UIF has opened June applications for TERS. Visit www.uifecc.labour.gov.za/covid19 to apply.

New broom to sweep clean at SARS' VDP Unit?

On 19 June 2020, Webber Wentzel participated in the SARS' Voluntary Disclosure Programme Feedback Survey for 2020. This insight piece sets out the key concerns discussed by Webber Wentzel and other participants.

SARS and the fiscus may benefit when executives have to pay back

On occasions when company executives have to pay back a portion of their remuneration, the fiscus may unjustifiably benefit at the expense of employers from the tax previously paid on these amounts. This situation could be made fairer by adding a simple provision to the Income Tax Act.

Estimating the tax effects of the sale of a business in the hands of a seller

Tax practitioners are often asked to calculate the indicative effects of the prospective sale of a business (assuming no roll-over relief applies) for the seller.

Covid-19 tax relief measures and time concessions

The following is a summary of the Revised Draft Disaster Management Tax Relief Bill and Revised Draft Disaster Management Tax Relief Administration Bill, Draft Explanatory Memorandum, National Treasury Media Statement and Draft rule amendments of the Customs and Excise Act 1964.

Covid-19: How to manage 'place of effective management' tax risk during lockdown

Covid-19 is only anticipated to peak in South Africa (SA) in September 2020, with international air travel only being permitted once the current lockdown restrictions are reduced to Level 1.

Decision clarifies the law on the deduction of transportation, insurance and handling of mineral costs - section 6(3)(b) of the Mineral and Petroleum Resources Royalty Act

A recent decision by Supreme Court of Appeal will be welcomed by the relevant taxpayers for clarifying the law on the deduction of transportation, insurance and handling of mineral costs in terms of section 6(3)(b) of the Mineral and Petroleum Resources Royalty Act, 28 of 2008.

Covid-19: Tax relief proposed by the President

The address by President Cyril Ramaphosa on Monday, 23 March 2020, set out certain fiscal relief measures to help small and medium enterprises and vulnerable firms mitigate cash flow constraints as a consequence of the COVID-19 outbreak.

OECD/G20 - understanding the proposed Inclusive Framework & the tax challenges of the digital economy

On 31 January 2020, the OECD/G20 Inclusive Framework released a statement which sets out its approach to tackling the tax challenges of the digital economy.

A sensible 2020 Budget, focused on growing the SA economy

Finance Minister Tito Mboweni’s 2020 Budget demonstrates a welcome shift in emphasis towards measures to stimulate the South African economy rather than increase tax collections.

Chambers Global recognises excellence at Webber Wentzel

Chambers Global has released their 2020 results. Webber Wentzel had an exceptional year with key highlights.

Chambers Corporate Tax 2020 (Q&A): South Africa

Webber Wentzel has contributed to the Chambers and Partners: Corporate Tax 2020 Guide. The Corporate Tax Guide covers common issues in corporate tax laws and regulations.

International Comparative Legal Guide to: Corporate Tax 2020

Webber Wentzel has contributed to the International Comparative Legal Guide to: Corporate Tax 2020. The Corporate Tax Guide covers common issues in corporate tax laws and regulations.

Update on unforeseen preference share amendments

The 2019 Taxation Laws Amendment Bill (TLAB) contains a significant and unexpected amendment to the definition of "hybrid equity instrument" in section 8E of the Income Tax Act.

New exception to the loop structure prohibition for private individuals

South Africa's exchange control regulations generally prohibit South African residents from holding an interest in a foreign company which, in turn, holds any interests or assets in a CMA country (so-called "loop structures").

Unforeseen preference share amendments

The 2019 Taxation Laws Amendment Bill (TLAB) was tabled with the Medium Term Budget Policy Statement on 30 October 2019. The TLAB contains a significant amendment to the definition of "hybrid equity instrument" in section 8E of the Income Tax Act, which will deem any distributions made within 3 years of the date of issue of a preference share to be treated as normal income and fully taxable in the holder's hands.

Webber Wentzel wins at the AGF Service Providers Awards

Webber Wentzel was awarded two awards at the 2019 Africa Global Funds (AGF) Awards held on 24 October 2019.

Tax case update: The end of NRV for closing stock (or not?)

The Supreme Court of Appeal (SCA) has for the second time in CSARS v Atlas Copco South Africa (Pty) Ltd (judgement delivered on 27 September 2019), confirmed that the net realisable value (NRV) method is not a suitable method to value closing stock for income tax purposes.

The Legal 500: Tax 4th Edition Country Comparative Guide

This country-specific Q&A provides an overview to tax laws and regulations that may occur in South Africa.

Navigating the administrative regime of the Carbon Tax Act

The Carbon Tax Act 15 of 2019 (Carbon Tax Act), the Customs and Excise Act 91 of 1964 (Customs Act) and the Customs and Excise Amendment Act 13 of 2019 (Customs Amendment Act) pose numerous uncertainties on the road to implementation of carbon tax.

Significant changes in the pipeline - taxation of expats in South Africa

Some South African tax residents working abroad, often referred to as "expats", are grumbling about changes to the Income Tax Act, 1962 (the Act) which comes into effect on 1 March 2020.

SARS clarifies what transport services "rendered by the employer" means

To assist employers and employees with over-coming transport-related difficulties, the Income Tax Act, 1962 (the Act) introduced a mechanism to allow employers to provide transport services to their employees and that, although qualifying as a taxable fringe benefit in the employees' hands, no taxable value was given to such benefit.

Carbon Tax Updates

On Friday, 29 March 2019 the National Council of Provinces (NCOP) adopted the Carbon Tax Bill (the Bill) in its last sitting ahead of the national elections.

The proposed zero-rating of sanitary towels (pads)a slightly hollow victory for South Africa Women - here’s why…

During the medium term budget in October 2018, the Minister of Finance announced that sanitary towels (pads) will be included to the list of those items that are zero rated for VAT purposes.

VAT - 'Electronic services' (e-commerce) regulations finally promulgated

The introduction of the new VAT regime for cross-border e-commerce transactions is a major game changer, regardless of whether the recipient is an individual or company.

New Partner Promotions

Webber Wentzel has announced 7 new partners across 6 practice areas, namely public law, projects, tax, employment, antitrust/competition, and dispute resolution. Three of our new partners are women and three are black which continues to strengthen the Employment Equity representation in the firm.

The Budget Review 2019

The Budget Review 2019 (Budget) was released by the National Treasury this afternoon. Chapter 4 and Annexure C of the Budget introduce on a high-level changes to tax policies or tax clarifications that would be implemented in the draft taxation law and tax administration law amendment bills to be circulated mid-2019.

Webber Wentzel publishes insights pieces looking at key legal and regulatory developments for 2018/2019

Webber Wentzel together with its alliance partner, Linklaters, recently published a Year in Review and Year to Come 2018/2019 insights piece. This publication highlights significant legal and regulatory developments that took place in South Africa during 2018, and expected changes for 2019.

Mr A and XYZ CC v The Commissioner of the South African Revenue Service

In the case of Mr A and XYZ CC v The Commissioner of the South African Revenue Service the Tax Court had to determine whether the conduct of the appellants was properly classified by SARS as 'grossly negligent' for purposes of imposing understatement penalties.

Directors of private companies are no longer subject to PAYE - true or false?

Where fixed monthly payments made up less than 75% of private company director remuneration, paragraph 11C of the Fourth Schedule to the Income Tax Act 58 of 1962 used to apply to require payment of employees’ tax for such directors on a monthly basis in respect of "deemed remuneration". This "deemed remuneration" was a notional amount determined in terms of a formula in paragraph 11C. Paragraph 11C was repealed with effect from 1 March 2017.

National Treasury hopes to clarify anomalies relating to taxing REITs soon

The taxation of real estate investment trusts (REITs) was discussed at the recent National Treasury Workshop on the 2018 draft Taxation Laws Amendment Bill, held on 4 September 2018, in Midrand. The correct tax treatment of certain anomalies, including the taxing of commercial lease deposits, was raised.

National Treasury seeks to empower low-income employees

National Treasury's proposal in the draft 2018 Taxation Laws Amendment Bill (2018 draft TLAB) to remove the taxable benefit concerning low or interest free loans granted to low-income employees for low-cost housing (the Proposed Amendment) was discussed on Day 2 of the recent National Treasury Workshop on the 2018 draft TLAB (Tax Workshop).

Tax court confirms contributions to fund share incentive scheme are deductible

There have been a number of binding private rulings providing for the deductibility of contributions made by employer companies to share incentive trusts for the purpose of acquiring shares in the former. Although a binding private ruling is only binding on SARS and the applicant, published rulings can be relied on to provide an indication of the interpretation of law. In our interactions with SARS officials, we have found that this interpretation has generally been accepted, ie that contributions made to trusts for the purpose of acquiring shares in the employer company are deductible over the vesting period of the scheme.

The changing face of VAT and e-commerce in SA

It is no secret that tax systems around the world are struggling to keep pace with the digitisation of commerce and South Africa too, after an initially pro-active stance towards taxing e-commerce, was arguably starting to fall behind in this "new frontier for VAT".

SARS prescription only starts once tax return has been submitted

In the recent case of CSARS v Char Trade, the Supreme Court of Appeal (SCA) that prescription begins to run against CSARS when a return for secondary tax on companies (STC) is submitted to SARS by a taxpayer. In the Char Trade case, a return for STC had not been submitted by the taxpayer. Due to this, prescription had not begun to run against CSARS. The result of this is that CSARS was able to make an assessment in 2012 of the taxpayer's liability amounting to ZAR 1,812,609 for the 2007 cycle.

2018 Draft Taxation Bills

The Draft 2018 Taxation Laws Amendment Bill and Draft Tax Administration Laws Amendment Bill were released for comment by National Treasury on 16 July 2018 (the 2018 Draft Bills).

Potential amendments affecting foreign trusts holding shares in foreign companies

National Treasury has held a few workshops this year to engage with stakeholders on proposed amendments before the draft amendment bills are circulated for comment. At one of these workshops attended by the Webber Wentzel Tax Team, National Treasury indicated that there could be amendments in the draft bills which would affect resident beneficiaries and donors to foreign trusts, where these foreign trusts hold shares in foreign companies.

Tax non-compliance status may be inaccurate

SARS replaced the Tax Clearance Certificate (TCC) system with the enhanced Tax Compliance Status (TCS) system on eFiling in April 2016. The new TCS system is aimed at improving tax compliance as taxpayers can better manage their TCS and remedy any non-compliance through the "My Compliance Profile" (MCP) function on eFiling.

Highlights from the Mauritian Budget Speech 2018

The Mauritian Prime Minister (and Minister of Economic Development) delivered the 2018-2019 Budget Speech titled "Pursuing our Transformative Journey" on 14 June 2018 (Budget).

Urgent reinstatement of tax compliance status granted

For certain taxpayers, a tax clearance certificate is of utmost importance in ensuring that it is able to receive payment and to tender for new services. In the recent Gauteng High Court decision (Red Ant Security Relocation and Eviction Services (Pty) Ltd v CSARS (2999/18)), the taxpayer applied for urgent interdictory relief for reinstatement of its tax compliance status in order to be able to generate a tax clearance certificate pending determination of review proceedings which it had instituted against CSARS.

Unforeseen tax impact in amendments to articles of association

The recent Supreme Court of Appeal judgement of CSARS v The Executors of Estate Late Sidney Ellerine illustrates the importance of obtaining tax advice where rights, privileges or conditions of shares may potentially be affected by amendments to the memorandum of incorporation of a company.

Non-submission of transfer pricing documentation is an incidence of non-compliance

It has long been the position that there are no specific penalties for the non-submission of tax returns and accompanying schedules for corporate taxpayers.

Overlap in treatment of dividend

Section 1 of the Income Tax Act (ITA) defines a "dividend" to be any amount transferred by a resident company for the benefit of any person in respect of any share in that company whether by way of a distribution or consideration for a share repurchase but does not exclude a reduction of contributed tax capital of the company.

Notification of commencement of audit

The obligation of SARS to collect tax and taxpayers' rights are often at odds with each other.

Refining rules for debt-financed acquisitions of controlling interest in an operating company

Section 24O of the Income Tax Act 58 of 1962 (ITA) was introduced in 2012 and was aimed at discouraging the use of so called "debt push-down" structures (using section 45) by deeming interest incurred on a loan used by a taxpayer to acquire shares in a resident operating company (as defined in section 24O), to be incurred in the production of the income of that taxpayer and laid out for the purposes of its trade.

Treatment of trading profits realised by collective investment schemes

Paragraph 61 of the Eighth Schedule of the Income Tax Act 58 of 1962 (ITA) provides that a holder of a "participatory interest" in a portfolio of a collective investment scheme (other than a portfolio of a collective investment scheme in property), must determine a capital gain or capital loss in respect of the participatory interest only upon the disposal of that participatory interest.

Controlled Foreign Companies: Filing requirements

Where a South African taxpayer owns directly or indirectly more than 50% of the shares in a foreign company, the foreign company will generally qualify as a so-called "controlled foreign company" (CFC) under South African tax law.

SARS snuffs out Lion Match's "novel" application

The Taxpayer, Lion Match Company Proprietary Limited, disposed of its shareholding in Kimberly Clark Group during 2008 and ascribed the market value to the shares as at 1 October 2001 as the base cost in determining its taxable capital gain on the disposal.

Hybrid Equity Instruments: Redemption versus repurchase

Section 8E of the Income Tax Act, 1962 (the Act) applies to inter alia deem a share to be a hybrid equity instrument if certain requirements are met, with the result that otherwise exempt dividends paid in respect of that share are deemed to be fully taxable income.

Common misconceptions: Tax treatment of directors' fees derived by non-residents

Many non-residents that derive directors' fees from a South African tax resident company believe that because they are non-resident and pay tax in their country of residence on such directors' fees they are not liable to tax in South Africa.

Proposed amendments to controlled foreign companies

South Africa's tax legislation contains controlled foreign company (CFC) rules which aim to prevent South African taxpayers from locating companies in low tax jurisdictions in an effort to avoid paying South African tax.

Disrupting the Disrupted: The Dawn of Fintech Regulation in the Twin Peaks New World Order

The South African Revenue Service (SARS) has effectively broken the regulator blood oath taken in 2014 that had frozen the South African cryptocurrency market in the realm of regulatory neutrality for the past 3 years.

Do not go gently into that good Declaratory Order

A declaratory order is a flexible remedy which can assist in clarifying issues of law expeditiously.

Medical rebate, adjusted today gone tomorrow

The Income Tax Act 58 of 1962 (ITA) was amended in 2012 to provide for a different method of treating medical expenses for individuals.

Webber Wentzel strengthens its Funds Practice

Webber Wentzel re-appoints Michael Denenga, one of South Africa's leading experts in finance and investment funds.

Debt relief measures may provide (some) relief

The proposed debt relief measures in the 2017 amendments to section 19 and paragraph 12A of the Eighth Schedule of the Income Tax Act 58 of 1962 (ITA) did not provide much relief to "assist companies in financial distress", as was the intention in the Explanatory Memorandum to the draft Taxation Laws Amendment Bills, 2017.

Tax treatment of excessive debt financing under review

Malusi Gigaba stated in the Budget Review 2018 (Budget) that: "The deductibility of interest payments on debt acts as an incentive to use debt rather than equity funding, and can be used to strip profits from high tax countries."

Interaction between share buyback and corporate rules to be reviewed

There have been various amendments to the Income Tax Act 58 of 1962 (ITA) targeting the perceived abuse of share buybacks and dividend stripping arrangements since 2011.

Cryptocurrency transactions

In South Africa, as with most other countries around the world, there is no guidance and regulation regarding cryptocurrencies such as Bitcoin.

The tax implications of fruitless and wasteful expenditure

One of the proposals in the Budget Review 2018 (Budget) to preserve a sustainable tax base is to disallow fruitless and wasteful expenditure by government entities.

Budget Review 2018 - Insights on tax and exchange control

Further to the Budget Review 2018 (Budget) e-alert we sent on 21 February 2018, please find a detailed newsletter with our insights into some of the more notable proposed amendments in the Budget on tax and exchange control.

Better road ahead for research & development incentive

The Budget has the task of funding a projected revenue shortfall of ZAR 48.2 billion in 2017/2018 and also of promoting economic growth in an economy which has shown signs of lethargy in recent times. One of the measures the Budget proposes to boost the economy is through better use of tax incentives, including the research and development (R&D) incentive in section 11D of the Income Tax Act (ITA).

VAT rate increase: what you need to consider

The Minister of Finance announced in his recent Budget Speech that the VAT rate would be increased from 14% to 15% with effect from 1 April 2018.

VAT rate increase: what you need to consider

The Minister of Finance announced in his recent Budget Speech that the VAT rate would be increased from 14% to 15% with effect from 1 April 2018.

Budget Review 2018

The Budget Review 2018 (Budget) was released by the National Treasury on 21 February 2018. We discuss significant amendments included in Annexure C and Chapter 4 of the Budget in this article.

Webber Wentzel Tax Seminar : February 2018

Closing the tax loopholes has always been a key focus of the South African Revenue Service (SARS) and now, with a ZAR 50 billion revenue shortfall, it is more critical than ever.

Tax break for employees on voluntary retrenchment benefits

The South African Institute of Tax Professionals (SAIT) recently made submissions to the South African Revenue Service (SARS) regarding the tax treatment of amounts received in consequence of voluntary retrenchments. SAIT has received clarification that voluntary severance packages qualify as severance benefits.

Property developers will face cash flow pressure due to VAT on temporary rental of residential units

The curtains have come down on section 18B of the Value-Added Tax Act, No. 89 of 1991 (VAT Act) and the resultant impact may catch a few residential property developers off-guard.

South Africa - Year in Review and Year to Come 2017/2018

In 2017, we saw significant legal and regulatory changes affecting South African businesses. It is likely that 2018 will bring further changes.

Tax victory for automotive manufacturers

A recent Supreme Court of Appeal (SCA) judgment (Volkswagen South Africa (Pty) Ltd v CSARS) provided much needed clarity that Productive Asset Allowance (PAA) certificate amounts granted to automotive manufacturers are capital in nature as their purpose is to incentivise capital investments.

The not so sweet Sugar Tax

The proposal to tax the sugar content of beverages first came to light in the 2016 Budget. On 5 December 2017, after 18 months of debate, Parliament adopted the tax on sugary beverages (Sugar Tax), which is expected to commence on 1 April 2018.

The "PITfalls" identified by SARS' 2017 Tax Statistics

National Treasury and the South African Revenue Service released the 10th annual edition of the tax statistics for South Africa on 12 December 2017.

Fiscal Pressure - Tax hikes are not the solution

South Africa suffers from a trifecta of social challenges, namely: inequality, poverty and high levels of unemployment.

New debt relief measures provide limited or no relief

The reduction of debt in the Income Tax Act, 1962 is currently dealt with in section 19 and paragraph 12A of the Eighth Schedule.

The 2017 AGF Africa Service Providers Awards recognises Webber Wentzel

The winners of the annual AGF Africa Service Providers Awards have been announced and Webber was awarded Best legal service: investment funds and Best tax advisory firm.

Various amendments on the Taxation Laws Amendment Bill, 2017

In this article covering the Taxation Laws Amendment Bill, 2017 (TLAB), we discuss amendments to the Income Tax Act, 1962 (ITA) on the contributed tax capital (CTC) limitations to non-resident shareholders, amendments relevant to long-term insurers, alignment of section 24JB to the International Financial Reporting Standards 9 (IFRS 9), and the additional doubtful debt deduction available to banks.

Taxation Laws Amendment Bill, 2017 - Part 5

In this fifth and final e-alert covering the Taxation Laws Amendment Bill, 2017 (TLAB), we discuss amendments to the Income Tax Act, 1962 (ITA) on the contributed tax capital (CTC) limitations to non-resident shareholders, amendments relevant to long-term insurers, alignment of section 24JB to the International Financial Reporting Standards 9 (IFRS 9), and the additional doubtful debt deduction available to banks.

Taxation Laws Amendment Bill, 2017 - Individuals and International Tax

The Taxation Laws Amendment Bill, 2017 was released on 25 October 2017 and has since been tabled to the Standing Committee on Finance.

Taxation Laws Amendment Bill, 2017

In this article covering the Taxation Laws Amendment Bill, 2017 (TLAB), we discuss amendments in the Income Tax Act, 1962 (ITA) on the new debt relief measures and the meaning of "debt" in the corporate rules.

Taxation Laws Amendment Bill, 2017 - Part 4

In this fourth e-alert covering the Taxation Laws Amendment Bill, 2017 (TLAB), we discuss amendments in the Income Tax Act, 1962 (ITA) on the new debt relief measures and the meaning of "debt" in the corporate rules.

National Treasury shows some flexibility on share buy-back rules (but not a lot)

The Taxation Laws Amendment Bill (TLAB), released on 25 October 2017, proposes measures intended to target certain share buy-back and dividend stripping arrangements.

Notable amendments in the Taxation Laws Amendment Bill - Part 2

The Taxation Laws Amendment Bill (TLAB) and Tax Administration Laws Amendment Bill (TALAB) were released on 25 October 2017. Our e-alert sent on 26 October 2017 discussed the tax administration, dispute resolution and value-added tax amendments in the bills. In this second ealert, we discuss amendments in the TLAB on international tax. We also discuss notable amendments relevant to individuals and trusts.

Amendments in the final tax bills on tax administration, dispute resolution and value-added tax

The Tax Administration Laws Amendment Bill (TALAB) and Taxation Laws Amendment Bill (TLAB) were released with the Medium Term Budget Policy Statement 2017 on 25 October 2017.

Notable amendments in the Tax Administration Laws Amendment Bill and Taxation Laws Amendment Bill on tax administration, dispute resolution and value-added tax

The Tax Administration Laws Amendment Bill [B28 - 2017] (TALAB) and Taxation Laws Amendment Bill [B27 - 2017] (TLAB) were released with the Medium Term Budget Policy Statement 2017 on 25 October 2017. Our newsletters on the Budget 2017 and draft bills can be found using the hyperlinks.

Tax Court confirms a hard line in relation to requests for reasons

The Income Tax Court (Tax Court) recently handed down judgment in ITC 0032/2016 and ITC 0033/2016 which were two identical applications dealing with taxpayers' requests for reasons.

Understatement penalties for gross negligence

The Tax Court handed down judgement on 18 August 2017 in the case of ABC Proprietary Limited v C: SARS.

Revised proposals where conversions of debt to equity (and more!) could result in income tax for the debtor

The draft Taxation Laws Amendment Bill, 2017 (DTLAB) provided for new sections 19A and 19B in the Income Tax Act 58 of 1962 (the Act) to provide for recoupment of interest arising from conversions of debt to equity.

Update on proposed amendments to the Income Tax Act

We previously covered the notable amendments in the draft Taxation Laws Amendment Bill, 2017 (DTLAB) and draft Tax Administration Laws Amendment Bill, 2017 (DTALAB) in our newsletter which can be found here.

New requirements for waiving debt owed by dormant group companies

Currently, debt waiver provisions in the Income Tax Act 58 of 1962 (ITA) are dealt with in section 19 and paragraph 12A of the Eighth Schedule.

Notes on National Treasury workshop on extension of CFC rules to foreign trusts and foundations

The draft Taxation Laws Amendment Bill, 2017 proposes to extend the existing controlled foreign company (CFC) rules to include foreign trusts and foundations, and foreign companies which are not necessarily subsidiaries of resident companies, but are considered to be "controlled" in terms of International Financial Reporting Standards 10 (IFRS 10).

Be(a)ware of the tax consequences of converting debt to equity

One of the methods used by creditors to provide breathing space to their distressed debtors is to convert the debt owed to equity shares in the debtor company.

Webber Wentzel makes a submission to the draft Taxation Laws Amendment Bill

Joon Chong, Partner in the Webber Wentzel Tax Team, made oral submissions on the draft Taxation Laws Amendment Bill, 2017 on 29 August 2017 at the public hearings to Parliament's Standing Committee of Finance.

Multinationals in high-tax jurisdictions to benefit from relaxed IP regulations

The 2017 Budget announced that the regulatory framework regarding cross-border intellectual property transactions is to be relaxed, for both tax and exchange control purposes.

Investment funds: the South African headquarter company regime hurdle

With the increasing appetite for investments into African jurisdictions, the South African private equity landscape needs to adapt in order to attract direct foreign investment and to facilitate the seamless investment and divestment in and from these jurisdictions.

Tax exemption for SA residents working in foreign countries revoked

The 2017 draft Taxation Laws Amendment Bill and draft Tax Administration Laws Amendment Bill were released for comment on 19 July 2017.

Expansion of banks’ power to hold funds on suspicion of a tax offence

The 2017 draft Taxation Laws Amendment Bill and draft Tax Administration Laws Amendment Bill were released for comment on 19 July 2017.

2017 Draft Taxation Laws Amendment Bill and Draft Tax Administration Laws Amendment Bill

The 2017 Draft Taxation Laws Amendment Bill and Draft Tax Administration Laws Amendment Bill were released for comment on 19 July 2017. In our latest newsletter, we focus on some of the core amendments proposed in the draft legislation relating to direct and indirect taxes as well as tax administration. As your trusted tax advisor, we remain committed to providing you with pertinent information to help you navigate the complex and shifting tax laws.

Employees' Tax on Termination

Employees are entitled to certain payments upon termination of their employment. Some are payments to which they are entitled by law while others are payments to which employees may be entitled to in terms of their contracts of employment.