Below, please find issue 53 of ENSafrica's tax in brief, a snapshot of the latest tax developments in South Africa.

case law

  • High Court of South Africa (Gauteng Division, Pretoria) | C:SARS v ZCMT in re: Mpisane v ZCMT & C:SARS (14886/16)
    • Whether a final winding-up order should be granted in respect of the respondent (ZCMT), taking into account the provisions of the Tax Administration Act, 2011 ("TAA").
      • section 346 of the Companies Act, 2008.
      • section 177(3) of the TAA.
    • The court confirmed what is required by the South African Revenue Service ("SARS") when bringing an application to place a company into liquidation where there is an assessment under objection and/or appeal.
    • Find a copy of this judgment here.
  • High Court of South Africa (Gauteng Division, Pretoria) | Full-bench appeal from the Tax Court | C:SARS v The Executor of the Estate Late Ndlovu (A395/2016)
    • The taxpayer failed to declare a gain in a tax return and SARS imposed a 10% penalty under section 76(1)(b) of the Income Tax Act, 1962 plus interest under section 89quat(2) of the Income Tax Act.
    • The Tax Court reduced the penalty to nil and permitted the taxpayer to appeal against the imposition of section 89quat interest despite the taxpayer raising this as a ground for the first time on appeal.
    • The High Court considered:
      • section 76(1)(b) of the Income Tax Act.
      • section 89quat(2) of the Income Tax Act.
      • rule 7(2) of the Tax Court rules.
    • The High Court reinstated the 10% penalty and refused to allow the appeal against section 89quat interest; and in any event found that the taxpayer had not shown reasonable grounds for the interest to be waived.
    • The appeal was upheld with costs.
    • Find a copy of this judgment here.

legislation and draft legislation

  • National Treasury | Draft Response Document on the 2020 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill, 2020 Draft Taxation Laws Amendment Bill, and 2020 Draft Tax Administration Laws Amend/ment Bill
    • Find a copy of the response document here and the National Treasury Presentation to the Standing Committee of Finance here.
  • TAA, 2011 | regulations for purposes of paragraph (a) of the definition of "international tax standard" in section 1 of the TAA
    • The changes to the OECD Standard for Automatic Exchange of Financial Account Information in Tax Matters which encompasses the Common Reporting Standard ("CRS") are described in the notice published on 9 October 2020.
    • The revised regulations reflect the changes to the CRS required to enable South Africa to comply with its obligations.
    • The revised regulations will apply from 1 June 2021; until then the current regulations will remain applicable.
    • Find a copy of the notice here.
    • For more information on the automatic exchange of information (US Foreign Account Tax Compliance Act (FATCA) and the CRS, click here.
  • Tax Administration Laws Amendment Bill, 2020 | notice 1106 in Government Gazette 43830
    • The notice serves to inform of the Minister of Finance's intention to introduce the Tax Administration Laws Amendment Bill, 2020, in the National Assembly on 28 October 2020, and contains an explanatory summary of the Bill in accordance with the Rules of the National Assembly.
    • Find a copy of the notice here.

SARS publications

  • SARS released the following updated guides relating to Tax Directives | The email addresses have been replaced with the new email address
    • Guide to Complete the Tax Directive Application Forms
      • find a copy of the guide here.
    • Completion Guide for IRP3(a) and IRP3(s) Forms
      • find a copy of the guide here.
    • Guide to Complete Submit and Cancel a Recognition of Transfer
      • find a copy of the guide here.
  • SARS released Issue 2 of the Guide on the Taxation of Professional Sports Clubs and Players
    • find a copy of the guide here.
  • SARS released a note stating that branch filings closed on 22 October 2020 with a reminder that all electronic submissions for non-provisional taxpayers, must be submitted before 16 November 2020.

exchange control

  • Updated Customs weekly list of unentered goods
    • Find a copy of the list here.
  • Customs and Excise Act No. 91, 1964 ("Customs and Excise Act") | tariff amendment notice R1097 of Government Gazette 43811
    • Amendment to section D to Part 1 of Schedule No. 6 by the deletion of refund item 621.16/104.21.03/02.01 in order to exclude denatured ethyl alcohol as a VMS does not receive, manufacture or use denatured ethyl alcohol.
    • Find a copy of the notice here.
  • Customs and Excise Act, 1964 | rule amendment notice R.1098 in Government Gazette 43811
    • Amendment to rules under sections 59A, 60 and 120 of the Customs and Excise Act – "days" in relation to the grace period allowed for compliance when updating registration or licensing information amended to "calendar days".
    • Find a copy of the notice here.

international

  • OECD Policy Response to Coronavirus (COVID-19) | Policy brief: E-Commerce in the time of COVID-19
    • The policy brief discusses how the COVID-19 crisis is accelerating an expansion of e-commerce towards new firms, customers and types of products, likely involving a long-term shift of e-commerce transactions from luxury goods and services to everyday necessities. It also highlights how policy makers can leverage the potential of digital transformation in retail and related areas to support business adaptation and to enhance social distancing, while ensuring that no one is left behind.
    • Find a copy of the policy brief here.
  • OECD/G20 Inclusive Framework on BEPS | Cover Statement by the Inclusive Framework on the Reports on the Blueprint of Pillar One and Pillar Two
    • As part of the ongoing work to develop a solution to the tax challenges of the digitalisation of the economy, the OECD/G20 Inclusive Framework on BEPS is seeking public comments on the Reports on the Pillar One and Pillar Two Blueprints.
    • Find a copy of the cover statement here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.