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ENSafrica tax in brief
issue 36 | 2019-10
Below, please find issue 36 of ENSafrica's tax in brief, a snapshot of the latest tax developments in South Africa.
case law
- Supreme Court of Appeal | C:SARS v Atlas Copco South Africa (Pty) Ltd
- whether the value of the taxpayer's trading stock had diminished, entitling SARS to make a just and reasonable allowance under section 22(1)(a) of the Income Tax Act, 1962 (the "Act"), considered.
- whether the taxpayer's group's policy of writing down the value of closing stock using a simple time-based approach was consistent with the requirement in section 22(1)(a) of the Act that there be a decrease in the market value of the stock, considered. o whether the cost price of the stock, and not the actual or anticipated value of the sale of the stock (represented by its nett realisable value (NRV), consistent with the IAS2 accounting standard), is the benchmark against which any claimed diminution in value is to be measured, determinative. o the practical approach to the application of section 22(1)(a) of the Act to high volumes of trading stock, considered. o find a copy of the judgment here.
legislation and draft legislation
no new legislation/draft legislation noted
advance tax rulings
draft binding general ruling (donations tax) | determination of the threshold for applying the higher rate of donations tax o section 64 of the Income Tax Act, 1962 (the "Act"). o this ruling provides clarity on the rate of donations tax chargeable for the value of any property disposed of under a donation, and the determination of the R30 million threshold to be applied to such value.
o due date for comments: 30 November 2019. o find the ruling here. binding private ruling 326 | group restructuring transactions in foreign jurisdictions o sections 1(1) definition of "trading stock"; 42(1) paragraph (b) of the
definition of "asset-for-share transaction"; 47(1) paragraph (b) of the definition of "liquidation distribution"; and 47(2) of the Act. o this ruling determines certain tax consequences of a proposed group restructuring. o find the ruling here. binding private ruling 327 | tax implications of a group restructuring o sections 10(1)(k)(i), 45(3A), 64F(1)(a), and 64G(2)(b) of the Act. o paragraphs 3, 20(1), and 35(3)(a) of the Eighth Schedule to the Act. o the ruling determines the tax consequences of a group restructuring which includes liquidation distributions. o find the ruling here. binding private ruling 328 | consecutive asset-for-share transactions o sections 42(1) paragraph (a)(ii) of the definition of "asset-for-share transaction"; 42(2)(a) and (b); and 42(7) of the Act. o this ruling determines the income tax consequences of consecutive asset-forshare transactions within the period of 18 months. o find the ruling here. binding private ruling 329 | tax consequences of intra-group restructuring and subsequent sale of assets to third party o sections 1(1) definition of "gross income" and "trading stock"; 41(1) definition of "asset", "capital asset", and "trading stock"; and 45 - definition of "intra-group transaction". o this ruling determines the tax consequences of an internal restructuring involving an intra-group transaction followed by a sale of assets to a third party o find the ruling here.
SARS publications
no new publications noted
exchange control
no new exchange control circulars noted.
customs and excise
International Trade Administration Act, 2002 | notice 1173 Government Gazette 42707 o administrative fees regulations are open for public comment. o a copy of this notice is available on request.
tariff amendment notice 1261 | Government Gazette 42726 o Amendment to Part 1 of Schedule No. 2 by the substitution of anti-dumping items 204.05/2004.10.2/03.07 and 204.05/2004.10.2/04.07 to amend the name of the producer/exporter PinguinLutosa Foods B.V to Lutosa Minute 04/2019 o find a copy of the notice here.
Custom and Excise Act, 1964 | notice R.1219 in Government Gazette 42718 o amendment to Part 1 of Schedule No. 1 by the substitution of tariff subheadings 1001.91 and 1001.99 as well as 1101.00.10, 1101.00.20, 1101.00.30 and 1101.00.90 to reduce the rate of customs duty on wheat and wheaten flour from 95.80c/kg and 143.69c/kg to 66.47c/kg and 99.71c/kg respectively, in terms of the existing variable tariff formula Minute 06/2019 o find a copy of the notice here.
international
OECD | latest dispute resolution statistics o find the latest Mutual Agreement Procedure ("MAP") statistics here, covering 89 jurisdictions and almost all MAP cases worldwide.
OECD and UNDP | Tax Inspectors Without Borders o find a copy of the Annual Report 2018/19 here and a copy of the media release here.
OECD | Taxes on polluting fuels are too low to encourage a shift to low-carbon alternatives o the OECD's "Taxing Energy Use 2019: Using Taxes for Climate Action" presents a snapshot of where countries stand in deploying energy and carbon taxes, tracks progress made, and makes actionable recommendations on how governments could do better. o find the media release here and the report, available 15 October 2019, here.
IMF, OECD, UN and World Bank Group | Platform for Collaboration on Tax invites comments on a draft toolkit designed to help developing countries with the implementation of transfer pricing documentation requirements o the Platform for Collaboration on Tax (a joint initiative of the IMF, OECD, UN and World Bank Group) is seeking feedback from the public on a draft toolkit designed to help developing countries in implementing effective transfer pricing documentation requirements by 8 November 2019. o find the media release here and the draft toolkit here.
OECD | Iceland deposits its instrument of acceptance for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting ("MLI") o find a list of all signatories and parties to the MLI here.
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