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2016 - 08 12 2016

Offshore companies and doing business in South Africa - A Companies Act Perspective

According to the most recent statistics released by the South African Revenue Service, South Africa remains a net importer of goods and services. Put differently, one could say that South Africans are more often clients in cross-border transactions than they would be the service provider. Many of our clients operate in this space, including foreign incorporated companies which are doing business in South Africa. This article is aimed at those specific clients of ours: those clients doing business in South Africa through companies incorporated outside of South Africa.

2016 - 08 12 2016

Tax Implications for International Branches

Irrespective of whether a South African company is expanding its business offshore, or whether international businesses set up shop in South Africa, companies trading internationally are often confronted with the complex tax implications for doing so. This article explores the tax implications linked to international branches of a company specifically; it does not consider the scenario where a corporate group would operate through separate companies set up in each of the various jurisdictions in which it operates. With a branch, it is contemplated therefore that a company tax resident in one country carries on operations in another country either by selling trading stock in that other country or rendering services there.

2016 - 12 09 2016

SPECIAL VOLUNTARY DISCLOSURE PROGRAMME (SVDP)

As you will recall in the Budget Speech the Minister of Finance proposed a Special Voluntary Disclosure Programme (SVDP) to enable South African resident to regularise foreign exchange transactions and the income tax consequences arising therefrom.

2016 - 12 09 2016

YOUR SME: KING IV CORPORATE GOVERNANCE CODE MAY APPLY TO YOU

The King reports over the last two decades have become locally and globally synonymous with good governance. To date the King Codes have had limited impact on small and medium enterprises (SMEs).

2016 - 12 09 2016

A GOOD NEWS STORY: FARMING IS DOING BETTER THAN WE THINK

One of the stories that underpins the current wave of pessimism around our economy is farming. We read stories about:

2016 - 12 09 2016

BE PREPARED AS GOVERNMENT TAKES AIM AT TRUSTS

For many years government has been hostile to trusts. In the latest draft Bill of 2016 taxation amendments, a provision has been inserted on trusts.

2016 - 01 07 2016

THE 2016 TAX SEASON IS OPEN

As is the case every year, the Commissioner for SARS recently published the annual notice to officially ‘open’ the 2016 tax season. Individuals and Trusts are now able to file their annual income tax returns for the 2016 year of assessment (which ended on 29 February 2016) from 1 July.

2016 - 01 07 2016

REGISTRATION REQUIREMENTS FOR THE SKILLS DEVELOPMENT LEVY

We have recently become aware of an increased level of audits being conducted by the South African Revenue Service (‘SARS’) in relation to taxpayers’ obligations in terms of the Skills Development Levies Act, 9 of 1999 (‘SDL Act’).  The focus appears to be specifically on non-compliant taxpayers who fail to register as required in terms of section 5 of the SDL Act, and therefore for these employers to pay the requisite levy over to SARS.  The problem is perhaps amplified thereby that the skills development levy is often considered an ‘unimportant’ tax by taxpayers (primarily due to it being less costly compared to for example VAT or income tax).  Compliance with the SDL Act is therefore not a top priority to taxpayers, with the effect that taxpayers are also not apprised of their rights and obligations in terms of this Act when confronted by SARS to register and settle an ostensible skills development levy obligation.

2016 - 01 07 2016

THE COMPANIES ACT’S SOLVENCY AND LIQUIDITY TEST

The solvency and liquidity test in section 4 of the Companies Act, 71 of 2008, presents arguably one of the most important requirements of that Act. Without satisfying this test, a company cannot declare dividends, cannot provide loans and other forms of financial assistance to directors or to prospective shareholders to enable the latter to subscribe for shares in the company, to name but a few examples. Where directors act in contravention of the prohibition in considering whether a company may enter into a transaction, they may be held personally liable for damages or losses suffered as a result (see section 77(3)(e)).

2016 - 01 07 2016

APPORTIONMENT OF EXPENDITURE FOR INCOME TAX PURPOSES

For income tax purposes and in terms of section 11(a) of the Income Tax Act, 58 of 1962, expenditure is deductible from income to the extent that the expenditure in question has been actually incurred for the purposes of trade and in the production of income, such expenditure not being of a capital nature.  Income as used in the above sense is a reference to ‘income’ as defined in the Income Tax Act.  Briefly, ‘income’ comprises ‘gross income’ less ‘exempt’ income (such as dividend receipts for example).  It follows therefore that expenditure incurred to produce tax exempt income is not deductible for income tax purposes.

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