On July 22, 2015 The Draft Taxation Laws Amendment Bill (TLAB), 2015 and Draft Tax Administration Laws Amendment Bill (TALAB), 2015 were released for public comment (For more information see our article from July 22, 2015). Public comments to the Standing Committee on Finance (SCOF) were presented at a hearing that was held on September 16, 2015. In this respect on October 15, 2015 on the website of the South African Ministry of Finance a draft response document with respect to this consultation was published.
The documents published on the website of the South African Ministry of Finance are:
· Standing Committee on Finance (SCOF): Draft Report-Back Hearings
And the following 2 Presentations:
· DRAFT RESPONSE DOCUMENT DRAFT TAXATION LAWS AMENDMENT BILL & TAX ADMINISTRATION LAWS AMENDMENT BILL - Standing Committee on Finance (Presenters: National Treasury and SARS)
· Implementing tax and harmonisation retirement reform - Presentation to Standing Committee on Finance (National Treasury)
According to the documents, the South African National Treasury and SARS received written comments from 52 commentators.
It is also that the proposed tax amendments contained in the draft TLAB 2015 that received the most comments included:
1. measures to close loopholes that allow for the circumvention of estate duty,
2. tax relief for certain collateral transactions,
3. the alignment of the tax treatment of insurance companies (both short-term and long-term insurers) with the SAM initiative, and
4. the withdrawal of special foreign tax credits for service fees sourced in South Africa.
The proposed tax amendments contained in the draft TALAB 2015 that received the most comments included:
1. procedure when legal professional privilege is asserted,
2. reduced assessments,
3. period of limitations for issuance of assessments, and
4. liability of third party appointed to satisfy tax debts.
The documents also state that in addition, concerns about the administration of the R & D tax incentive were raised.
The document Standing Committee on Finance (SCOF): Draft Report-Back Hearings discussed a.o. the following subjects:
· BACKGROUND
· INCOME TAX: INDIVIDUALS, SAVINGS AND EMPLOYMENT
· INCOME TAX: BUSINESS (GENERAL)
o DEBT-FINANCED ACQUISITIONS OF CONTROLLING SHARE INTERESTS
o DEBTORS ALLOWANCES ON INSTALMENT SALE AGREEMENTS
o ADDRESSING THE PROBLEM OF RETURN OF CAPITAL AFTER A TAXPAYER HAS HELD A SHARE FOR THREE YEARS
o SECURITIES TRANSFER TAX AND CAPITAL GAINS TAX IMPLICATIONS OF COLLATERAL ARRANGEMENTS
o REMOVING POTENTIAL ANOMALIES ARISING FROM CANCELLATION OF CONTRACTS
· TAX: BUSINESS (FINANCIAL INSTITUTIONS AND PRODUCTS)
o AMOUNTS TO BE INCLUDED IN THE INCOME OF A REIT: DEEMING PROVISIONS IN SECTION 25BB(3)
o TRANSITIONAL TAX ISSUES RESULTING FROM THE REGULATION OF HEDGE FUNDS
o TAX ISSUES RESULTING FROM THE INTRODUCTION OF THE SAM BASIS FOR SHORT TERM INSURERS
o TAX ISSUES RESULTING FROM THE INTRODUCTION OF THE SAM BASIS FOR LONG TERM INSURERS
o LIMITATION OF UNWARRANTED RELIEF FROM TAXATION IN RESPECT OF FOREIGN INSURANCE BY LONG TERM INSURERS
o REFINEMENT OF TAXATION OF RISK INSURANCE BUSINESS OF LONG TERM INSURERS
· INCOME TAX: BUSINESS (INCENTIVES)
o ACCELERATED CAPITAL ALLOWANCES FOR MANUFACTURING ASSETS GOVERNED BY SUPPLY AGREEMENTS
o EXTENDING THE WINDOW PERIOD AND INTRODUCING A COMPLIANCE PERIOD FOR THE INDUSTRIAL POLICY PROJECT TAX INCENTIVE REGIME
o FURTHER ALIGNMENT OF THE TAX TREATMENT OF GOVERNMENT GRANTS
o DEPRECIATION ALLOWANCE IN RESPECT OF TRANSMISSION LINES OR CABLES USED FOR ELECTRONIC COMMUNICATION OUTSIDE SOUTH AFRICA
o SPECIAL ECONOMIC ZONES (SEZ): ANTI-PROFIT SHIFTING PROVISION
o DEPRECIATION ALLOWANCES FOR RENEWABLE ENERGY MACHINERY
o ADJUSTMENT OF ENERGY SAVINGS TAX INCENTIVE
· INCOME TAX: INTERNATIONAL
o REVISION OF THE DEFINITION OF FOREIGN PARTNERSHIP
o REMOVING CAPITAL GAIN TAX RULES APPLICABLE TO CROSS ISSUE OF SHARES AND INTRODUCING COUNTER MEASURES TO ADDRESS TAX-FREE MIGRATIONS
o WITHDRAWAL OF SPECIAL FOREIGN TAX CREDITS FOR SERVICE FEES SOURCED IN SOUTH AFRICA
o REINSTATEMENT OF THE CONTROLLED FOREIGN COMPANY DIVERSIONARY INCOME RULES
o DEFINITION OF INTEREST FOR WITHHOLDING TAX PURPOSES
· VALUE-ADDED TAX
o ENTERPRISE SUPPLYING COMMERCIAL ACCOMMODATION: MONETARY THRESHOLD ADJUSTMENTS
o ZERO-RATING: GOODS DELIVERED BY A CARTAGE CONTRACTOR
o ZERO-RATING OF SERVICES: VOCATIONAL TRAINING
o TIME OF SUPPLY: CONNECTED PERSONS (UNDETERMINED AMOUNTS)
o REPEALING THE ZERO-RATING FOR THE NATIONAL HOUSING PROGRAMME
o REMOVING THE REFERENCE TO “SHAREHOLDER” AS DEFINED IN THE INCOME TAX ACT
· TRANSFER DUTY ACT, 1949 (TDA)
· INCOME TAX ACT, 1962 (ITA)
· CUSTOMS AND EXCISE ACT, 1964 (C&E ACT)
· VALUE-ADDED TAX ACT, 1991 (VAT ACT)
o DOCUMENTARY PROOF
o PRESCRIPTION
· MINERAL AND PETROLEUM RESOURCES ROYALTY (ADMINISTRATION) ACT, 2008
o PENALTY FOR UNDERESTIMATION OF ROYALTY PAYABLE
· TAX ADMINISTRATION ACT, 2011 (TAA)
o DEFINITION OF INTERNATIONAL TAX STANDARD
o ADMINISTRATION OF TAX ACTS
o DELEGATION OF POWERS AND DUTIES
o LEGAL PROCEEDINGS INVOLVING COMMISSIONER
o REGISTRATION TO FURNISH THIRD PARTY RETURNS
o REPORTABLE ARRANGEMENTS
o PROCEDURE WHEN LEGAL PROFESSIONAL PRIVILEGE IS ASSERTED
o REQUEST FOR RELEVANT MATERIAL
o PRODUCTION OF RELEVANT MATERIAL IN PERSON
o ASSISTANCE DURING FIELD AUDIT OR CRIMINAL INVESTIGATION
o INQUIRY ORDER
o REDUCED ASSESSMENTS
o WITHDRAWAL OF ASSESSMENT AFTER PRESCRIPTION
o EXTENSION OF PERIOD OF LIMITATIONS FOR ISSUANCE OF ASSESSMEN
o JURISDICTION OF TAX BOARD
o SETTLEMENT OF DISPUTE
o LIABILITY OF THIRD PARTY APPOINTED TO SATISFY TAX DEBTS
o REFUNDS OF EXCESS PAYMENTS
o REPORTABLE ARRANGEMENT PENALTY
o VOLUNTARY DISCLOSURE PROGRAMME (VDP)
o DELIVERY OF DOCUMENTS
o TRANSITIONAL RULES
o NEW AMENDMENTS NOT CONTAINED IN THE DRAFT BILL PUBLISHED FOR COMMENT
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