Ensafrica Tax in Brief

ENSafrica | Africa’s largest law firm issue 65 | 2021-07 ENSafrica tax in brief Below, please find issue 65 of ENSafrica’s tax in brief, a snapshot of the latest tax developments in South Africa. case law Tax Court of South Africa I IEA Taxpayer v Commissioner for the South African Revenue Service ZATC [2021] Cape Town o The taxpayer (“Appellant”) appealed against the decision by the Commissioner for the South African Revenue Service (“SARS”) to disallow the Appellant from deregistering as a value-added tax (“VAT”) vendor, on the basis that the Appellant earned a fee for administering funeral policies on behalf of a long-term insurer (“insurer”). o The Appellant’s argument was that its business qualifies as a deemed financial service and thus the legislature intended that the fees earned by the Appellant fall outside the exclusions under section 2 of the VAT Act, 1991 (“VAT Act”). o The Tax Court considered, inter alia: . the terms of the agreement concluded between the Appellant and the insurer; . the definition of “financial service” under section 2 of the VAT Act; . the exemptions in section 12 of the VAT Act; and . Binding Private Ruling 34 (VAT) | Management of superannuation schemes: Long-term insurers. o The Tax Court held that the agreement concluded between the Appellant and the insurer makes it clear that the services performed by the Appellant are purely administrative ones for which the Appellant is paid a fee. The Appellant does not provide a long-term insurance policy. Accordingly, the activities of the Appellant cannot be deemed to be “financial services” for purposes of section 2 of the VAT Act. o The Tax Court dismissed the appeal. o Find a copy of the judgment here. advance tax rulings Binding Private Ruling (“BPR”) 366 | Distribution in specie of shares o This ruling determines the tax consequences of a distribution in specie of shares by a resident company to its shareholders. o Find the ruling here. BPR 365 | Interpretation and application of the de-grouping provision in section 45(4)(b) of the Income Tax Act, 1962 (“the Act”) o This ruling determines whether there is a de-grouping charge under section 45(4)(b) of the Act when a group of companies previously engaged in an intra-group transaction is transferred to form part of another group of companies which group is ultimately held by the same controlling group company. This ruling also considers the securities transfer tax consequences of the transfer of the shares. o Find the ruling here. Binding Class Ruling 077 | Capital gains tax consequences of in specie distribution by company to its shareholders o This ruling determines the capital gains tax consequences of an in specie distribution by a company to its shareholders. o Find the ruling here. Taxand Global Guide to M&A Tax 2021 ENSafrica has authored the South African chapter of the Taxand Global Guide to M&A Tax 2021, which provides at a glance insight into the tax treatment of global mergers and acquisitions. o Read the South African chapter here. SARS publications SARS has announced its adoption of certain precautionary steps in light of the rising COVID-19 cases, which include inter alia, the temporary closure of SARS’ branches from 1 July 2021. o Find the SARS media publication here. The Registration, Licensing and Designation Policy, as well as the Guide on Registration, Licensing and Accreditation Customs Trader Portal have been updated. o Find a copy of the latest Registration, Licensing and Designation Policy here. o Find a copy of the latest Guide on Registration, Licensing and Accreditation Customs Trader Portal here. Filing Season 2021 for individuals commenced 1 July 2021 o For the latest information, changes and enhancements on Filing Season, visit the Filing Season 2021 webpage by clicking here. o Watch SARS’ tutorial videos here. SARS has updated the following guides: o Find the Guide on How to eFile your Personal Income Tax Return here. o Find the Comprehensive Guide to the ITR12 Return for Individuals find a copy of the guide here. o Find the Guide to the Individual ITR12 Return for Deceased and Insolvent Estates here. o Find the Guide on Venture Capital Companies here. o Find the Guide for Provisional Tax here. o Find the Book an Appointment with a SARS Branch Guide here. o Find the Declaration of Dividends Tax via eFiling Guide here. SARS has released the guide toSARS Mobile Tax Services o Find a copy here. exchange control Exchange Control Circular No. 16/2021 o This circular relates to the appointment of Bank of Communications Co. Limited Johannesburg Branch as an Authorised Dealer in foreign exchange. o Find a copy of the circular here. customs and excise Customs and Excise Act, 1964 | amendments to rules under sections 59A, 60 and 120 (Publication details to be made available on 2 July 2021) o Amendment to rules under sections 59A, 60 and 120 – Electronic submission of applications for registration and licensing (DAR217) (with retrospective effect from 25 June 2021). o Find a copy of the amendment of rules here. Customs and Excise Act | tariff amendment notice R550, as published in Government Gazette 44759 of 25 June 2021 o Amendment to Part 1 of Schedule No. 4, by the substitution of Note 2 to Rebate Item 407.00, in order to correct the reference to rebate item 407.01/00.00/01.02 to 407.01/00.00/02.00. o Find a copy of the notice here. Customs and Excise Act | tariff amendment notice R549, as published in Government Gazette 44759 of 25 June 2021 o Amendment to Part 5 of Schedule No. 5, by the substitution of Note 5, in order to correct the reference to rebate to read as refund. o Find a copy of the notice here. Customs and Excise Act | tariff amendment notice R548, as published in Government Gazette 44759 of 25 June 2021 o Amendment to Part 6 of Schedule No. 5, by the substitution of Note 4, in order to correct the reference to rebate to read as refund. o Find a copy of the notice here. Customs and Excise Act | draft amendments to rules published for comment o Amendments to rules under section 77H and 120 of the Customs and Excise Act (i.e. internal appeals). o Due for public comment by 7 July 2021. o Find a copy of the draft rules here. Customs and Excise Act | draft amendments to rules published for comment o Amendments to rules under sections 59A, 76 and 120 of the Customs and Excise Act (i.e. exporter tax). o Due for public comment by 7 July 2021. o Find a copy of the draft rules here. Customs and Excise Act | Publication details for tariff amendment notices R548, R549, R550, R551, R552, R553 and R554 respectively, as published in Government Gazette 44759 of 25 June 2021, are now available. o The third phase of the enhancements to the Registration, Licensing and Accreditation (RLA) system has been implemented o The following client categories may now apply for registration or licensing electronically via eFiling: . Container Depots; . Degrouping Depots; . Storage warehouses (CCA enterprises); . Manufacturing Warehouses (CCA enterprises) – any goods other than goods liable to Excise Duty, Fuel Levy and Environmental Levy; and . Rebate users. o The additional system functionalities to apply for the above categories of clients have been incorporated in the Customs Trader Portal Registration, Licensing and Accreditation Guide to assist prospective clients to apply electronically via eFiling. Find a copy of the Customs Trader Portal Registration, Licensing and Accreditation Guide here. Find a copy of the Registration, Licensing and Designation Policy here. international On 24 June 2021, the Global Forum on Transparency and Exchange of Information for Tax Purposes published new peer review reports assessing the legal and regulatory framework against the international standard on transparency and exchange of information on request (EOIR) for Antigua and Barbuda, Argentina, the Russian Federation, South Africa and Ukraine. o Find more information regarding the key findings and recommendations here. o Find a copy of South Africa’s report here. On 22 June 2021, the OECD published a new report entitled, “Model Reporting Rules for Digital Platforms: International Exchange Framework and Optional Module for Sale of Goods”. The rules were developed in light of the rapid growth of the digital economy and in response to calls for a global reporting framework in respect of activities being facilitated by such platforms, in particular in the sharing and gig economy. o Find a copy of the report here. The list of countries that have a current International Agreement in place with South Africa but do not have a Qualifying Competent Authority Agreement in place for purposes of Article 2(2) of the Country-by-Country Regulations has been updated. o Find a copy of the updated list here. Statement on a Two-Pillar Solution to Address the Tax Challenges Arising From the Digitalisation of the Economy | 130 countries join bold new framework for international tax reform o 130 countries of the Inclusive Framework’s 139 members have agreed a two- pillar solution to address the tax challenges arising from the digitalisation of the economy. The agreed key components of each pillar are described in the Statement. The remaining elements of the framework, including the implementation plan, will be finalised in October 2021. o Find a list of the countries who have joined the statement here. o Find the statement here. The protection of your personal information is important to us ENSafrica takes your privacy and the protection of your personal information very seriously and is committed to doing the right thing as underpinned by our privacy policy and values.

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