TAXTALK - BIG BROTHER IS WATCHING
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
TAX TALK
SOUTH AFRICA’S LEADING TAX JOURNAL MARCH /APRIL2013
BIG BROTHER
IS WATCHING
Your lifelong
partner in tax.
www.thesait.org.za
Contents ISSUE 39 • March/April • 2013
02 | From the Editor
04 | Letters
05 | Contributors
06 | Review
06 | Global tax news
06 |New Zealand Backs OECD Tax
Work
06 | France mulls environmental
tax on cigarette stubs
07 | France Unveils National Plan
To Fight Tax Evasion
07 | Italian Business Taxpayers
22
Feel ‘Persecuted’
10 | Countries with no income tax
Shifts In
the INDUSTRY
Features
14 | Career change
15 | Reader's question
16 | Profile - Andrew Lewis
18 | Continuing professional
development – what's the
fuss? 22 Regulation of tax practitioners: some progress
FOCUS 35 Minimum standards for tax practitioners: where do we draw the line?
The Tax Administration Laws Amendment Act, 2012 (‘TA-
24 | Regulation is a win-win LAA’) brought about the formal regulation of the tax profes-
26 | The practice of due diligence sion in South Africa, effective 1 July 2013.
28 | Tax profession set for reform
30 | Tax and penalties – the
perspective of a tax
practitioner
38 | A parting shot – tax Lifestyle
practitioners, attorneys and
registering with sars “Tax practitioners need to 56 | Making way for
39 | Advice for tax practitioners
42 | Top 10 tips for tax be aware of a number of Afro-Chinese art
56 | Morning markets
practitioners
46 | Getting to grips with the requirements contained 57 | All about Jazz
57 | To do this month
TAA a key priority for tax
professionals in 2013 in the TAA to be able to 57 | Executive travel tips
58 | Eat out and sleep out
48 | Understanding the
psychology behind tax return provide clients with opinons 60 | It's time to get social
62 | Great South African
that can be of value”
32
52 | Successful tax practices: back inventions
to front 30 | Tax and penalties – the
perspective of a tax
TaxTalk 01
From the Editor
BIG BROTHER
is watching
“T
Budget Review and the new financial year. For us
here at TaxTalk we start the new financial year in
March with a new look and feel for the leading
he secret of rulership is to combine a tax journal. We trust that the journal will be an
belief in one’s own infallibility with a power to learn inspiration for you to take on the challenge of
from past mistakes.” George Orwell (1984) reshaping the image of the tax profession in the
year to come.
Roughly a year ago Finance Minister, Pravin This issue of TaxTalk is dedicated to the new
Gordhan’s budget speech was marked by his regulatory environment in which tax practitioners
sharp criticism of Tax Practitioners. In his speech will work from 1 July 2013. The Tax Admin-
the Minister spoke out against lax practitioners istration Act, 2011 was amended in December
who were not tax compliant in their personal 2012, introducing section 240A, making it a legal
capacities. More specifically, South African tax requirement for tax practitioners to register with
practitioners, personally, have more than 18 000 a recognised controlling body before 1 July 2013.
tax returns outstanding, and owing the fiscus in Essentially this means that anyone who assists in
excess of R180m. The Minister clearly do not completing a tax return or submitting any doc-
accept excuse that the “The cobbler's children go ument to SARS on behalf of another person and
unshod”, and rather requires accountability from who charges a fee for the service, to register with a
the tax profession. professional body.
While most people celebrate the start of a New beginnings also bring the start of new
new year in January, Tax Practitioners work on a endeavours. TaxTalk is proud to announce the
different schedule – one which is dictated by the success of the first annual Tax Student Confer-
ence held at Sun City on the 15th February. The
Conference brought together the tax profession,
Fasset, employers, students and SARS under one
roof, where students could engage sponsors, and
particularly potential employers. We thank all
of the sponsors for making this historic event
possible, with a special thanks to E&Y for their
platinum contribution.
We have also had the privilege of welcoming
new additions to our team. Natalia Carvalho, our
new designer, and Yanic Smit, publisher of Tax-
Talk, have brought a young and vibrant energy to
the magazine. In this edition we also introduced a
new lifestyle section. Turn to page
56 to read about festivals and other events in
South Africa.
We hope that this edition of TaxTalk, dedicated
to the regulation of the tax profession, will balance
the belief in infallibility with a power to learn
from past mistakes. And remember, Big Brother
(Oupa) is watching us.
Liz Jones
02 TaxTalk
The
Team
Publisher
Yanic Smit | yanic@mellamarketing.com
Chief editor
Liz Jones | liz@taxtalk.co.za
Technical sub-editor
Stiaan Klue | sklue@thesait.org.za
Feature writer
Yolande Botha
Art director
Natalia Carvalho | natalia@taxtalk.co.za
Design and layout
Natalia Carvalho
Jennifer Jacobs
Postal address
P O Box 51632, V&A Waterfront
Cape Town
8002
Editorial head office
Convention Tower
Mezzanine Level 2
Cnr Heerengracht & Coen Steytler St
Cape Town
8002
Advertising enquiries
Collette Evers | collette@4evers.co.za
4Evers Marketing Solutions
Tel: 011 704 0371
Cell: 082 349 9914
Michelle Baker| Michelle.baker@mediamarx.co.za
MediaMarx
Cell: 073 137 1231
Tel: 031 764 6725
Member of the Audit
Bureau of Circulation
Opinions expressed in this publication are those of the authors and do not necessarily
reflect those of this journal, its editor or its publishers. The mention of specific products
in articles or advertisements does not imply that they are endorsed or recommended
by this journal or its publishers in preference to others of a similar nature, which
are not mentioned or advertised. While every effort is made to ensure accuracy of
editorial content, the publishers do not accept responsibility for omissions, errors or any
consequences that may arise therefrom. Reliance on any information contained in this
publication is at your own risk. The publishers make no representations or warranties,
express or implied, as to the correctness or suitability of the information contained and/
or the products advertised in this publication. The publishers shall not be liable for
any damages or loss, howsoever arising, incurred by readers of this publication or any
other person/s. The publishers disclaim all responsibility and liability for any damages,
including pure economic loss and any consequential damages, resulting from the use
of any service or product advertised in this publication. Readers of this publication
indemnify and hold harmless the publishers of this magazine, its officers, employees and
servants for any demand, action, application or other proceedings made by any third
party and arising out of or in connection with the use of any services and/or products or
the reliance of any information contained in this publication.
TaxTalk 03
Letters HEATHER PRETORIUS
Dear Liz
To the I have always found TaxTalk to be highly informative
and have looked forward, with anticip-eish-on, to each
Editor
new issue. I must, however, compliment you and your
team. You surpassed yourselves in your previous issue.
I like the fact that it was jam –packed with interesting
articles, with the core focus being on important facets
of the Tax Adminis¬tration Act. As a Tax Practitioner,
it is great to have TaxTalk as a point of reference. I am
also proud to be associated with a publication of this
calibre. Well done, keep up the fantastic work and I
can’t wait for the next issue.
Heather Pretorius
HENDRIK VAN DEVENTER Heather Pretorius Consulting
(Registered Tax Practitioner)
CORINNE DE VILLIERS
T he great thing about being a tax profes¬-
sional is that change is constant (as much as it
grains in against the human makeup). I don’t
Dear Liz
I would like to take this opportunity to commend you and your Team on TaxTalk, an
outstand¬ing tax publication. You certainly do well in keeping us updated on cutting
edge tax information in the most functional, crisp and well-presented way.
recall a time where after a budget speech, there In the type of business that I am involved in, which is tax insurance, it is vital for
was not at least one thing that got us talking! It is us to be on top of the latest trends so that we can ensure that our policyholders and
probably fair to say that most people stop caring brokers are constantly fed with information relevant to the value of the tax insurance
the moment they know what their next packet of policies they are marketing and selling.
cigarettes or bottle of wine is going to cost them. Most definitely, you do support and compliment us with this significant objective.
But not the tax professional! Oh no! The fun only Thank you again and I am looking forward to the next edition.
starts then...
When it was announced a few years ago that Corinne de Villiers
the Tax Acts administered by the Commissioner Managing Director Tax Radar Underwriting Managers (Pty) Ltd
were being overhauled, no one really knew what
to expect. After much debate, public commen-
tary (which included challenges on the consti- MARC SEVITZ
tution¬ality of certain provisions), stakeholder
input, the likes of which the Commissioner said
he has never experienced or seen before, the I would like to comment on the new focus in each edition. Some publications
most profound change to the South African tax look TaxTalk. Firstly, I like the fact that have one huge feature and then smaller
environment became a reality. Known as the Tax the magazine is very weighty in the ar- articles. The TAB is perfect as it is the
Administra¬tion Act No 28 of 2011 (“TAA”), it ticles. I think it is important for readers, most topical for now and tax profession-
took effect on 01 October 2012. who are tax experts and professionals to als are very worried about the implenta-
The challenge with new legislation is the have detailed knowledge of the import- tion and we are only now getting to grips
uncer¬tainty around its practical application. The ant subjects. Other publications do not with what some of the provisions entail.
TAA is no different. It poses additional chal- go far enough in the specifics with a lot Overall though I really like the
lenges in that some of the provisions are being of the articles and certainly the more magazine and I think you have done a
transitioned. Tax professionals could perhaps be broader magazines don’t have the focus wonderful job! The look and feel is really
forgiven if our transition to understanding which or capabilities to do so. So, as a reader, great.
provisions apply, the TAA or the “old provisions” I think the articles are very well written
is phased as well. and informative. Dear Marc, we really appreciate your
I really would therefore like to compliment I also liked the educational element at thoughtful input. We have taken your
and extend my gratitude to you and SAIT for the the end and the pages with the upcom- suggestions into consideration and we
wonderful initiative of dedicating an entire issue ing conferences, that is really useful. The hope that you will see them reflected in
on the Tax Administration Act in the last edition. CPD points in the corner are always a this edition of TaxTalk. As always, it is
Tax professionals are bound to find the articles winner for those of us who don’t have our pleasure to bring you a magazine
extremely useful and it is sure to speed up our the time or the budgets to go to every that is both informative and enjoyable to
understanding. SAICA or SAIT event. read – Liz
The themed idea is also very good, I
Hendrik van Deventer like the con¬cept, instead of just having Marc Sevitz CA (SA) B. Comm,
SAIT member random articles, howev¬er, perhaps you PG Dip. Tax Law
should still include something out of the Director www.taxtim.com
04 TaxTalk
Contributors
Contributors
Analysis, opinion and debate from leading contributors around South Africa
Andrew Lewis
BCom (Law) LLB LLB HDip. (Tax), Universi-
ty of Johannesburg
Andrew began his career as a candidate attor-
ney with Cliffe Dekker (now Cliffe Dekker
Hofmeyr) in January 2008 and was appoint- ERICH BELL
ed as an associate in January 2010 and was B Com(hons) taxation(cum laude)
promoted to senior associate in 2012. Prior Employed at SAIT (Technical Team) Specific
to this he was part of the two year KPMG interest in the Tax Administration Act.
tax graduate programme in which he spent Page 48
roughly a year in both the corporate and
international tax departments. FRANZ TOMASEK
Page 16 General Manager- Legislative Policy-SARS
Page 24
PROF ANNELINE VENTER
CA (SA) MCom (Tax) GRAEME SAGGERS-NOLANDS PROF. PIETER VAN DER ZWAN
Adjunct Professor of International Tax Law BCom, B Com (Accounting) (Hons) Pieter van der Zwan is an Associate Professor
(on-line LLM program), Thomas Jefferson Graeme is employed as a Manager at Nolands at the North-West University and technical
School of Law, San Diego, California (USA), Accountants, specialising in Auditing and tax advisor to a number of companies
Master Tax Practitioner (SA), Registered Tax Consulting. He is a qualified CA and Page 30
Accountant and Auditor did his articles at KPMG. Currently studying
Page 39 towards a MCom in Taxation at UCT.
Page 52 RONEL De Kock
Charl Geldenhuys BCom (Accounting sciences), B Com (Ac-
SAIT Academic Trainee at the University of JOAN HAMMAN counting sciences) (Hons), MCom (Taxation)
Pretoria. H Dip Internal Audit, B Compt Accounting, H Ronel is employed at SAIT as Head of
Page 26 Dip Tax Law (cum laude), M Com Interna- Education, Ronel was a Senior Lecturer at
tional Tax [Thesis: cum laude] University of Pretoria.
DIRK KOTZE –MAZARS Joan is a professional accountant and tax She is a qualified CA and did her articles at
B Comm(Hons) – NMMU -1998, CA (SA) consultant specialising in Tax Law. Com- PWC in Johannesburg.
Post Graduate Certificate in Advanced Taxa- menced her career with SARS in 2001 and Page 26
tion (Unisa) was awarded as a top performer by Pravin
Dirk is the Tax Partner in the Port Elizabeth Gordhan. Started her own practice in 2007 DR Sharon Smulders
office. His main duties involve advising Page 42 PhD Tax, Hons B.Com (Accounting), M.Com
clients on transaction structures and tax (Taxation), Chartered Accountant (SA), Mas-
strategy, assisting clients in resolving queries JOHN EDWARDS-NOLANDS ter Tax Practitioner (SA)
from the South African Revenue Services BCom Sharon was appointed as the Head of Tax
and maintaining the general tax knowledge Studied at UCT, obtaining a B.Com degree. Technical & Research at the South African
of the staff and Partners in the office. Articles at Greenwoods and KPMG .Quali- Institute of Tax Practitioners on 1 February
Page 22 fied as a CA in 1986. I completed Tax Hon- 2013. She is primarily responsible to liaise
ours degree in 1989. I became a director at with SARS, National Treasury, Parliament
PROF DANIEL N ERASMUS Nolands Inc. in March 2008. Specializing in and international organisations on all tax
International Tax Attorney and US Tax Court tax and estate planning, trusts and the wind- policy matters.
Practitioner, Professor of International Tax ing up of estates and business consulting. Page 35
Law and Senior International Tax Advisor Page 52
Daniel is currently an Adjunct Professor STEVE BINOS
in International Tax Planning & Tax Risk MARK KINGON Chief Imagineer at Dreamsmiths Marketing.
Management at the Thomas Jefferson School Group Executive – Business Operations – Steve helps organisations grow by imple-
of Law, San Diego, California SARS menting marketing systems that work.
Page 38 Page 24 Page 60
TaxTalk 05
Review
New Act will keep New
onerous TABs on SA’s “the real focus FATCA regulation
“Golden Goose” for tax payers brings certainty
Tax Administration Bill (TAB) brings this year should The new set of regulations governing the Foreign
added pressure and compliance to Accounts Tax Compliance Act (FATCA), recently
tax payers be on compliance released by the United States Treasury in conjunc-
tion with the Internal Revenue Services, (IRS)
Although speculation abounds as to what sur- with the new Tax bring certainty to the conduct of accounts held by
prises Finance Minister Pravin Gordhan may US taxpayers in Foreign Financial Institutions and
spring on the economy in his annual National Administration other off shore vehicles and instruments.
Budget Speech taking place on 27 February The 544 page regulations also raise a few
2013, the real focus for tax payers this year Act that came important issues, such as which institutions
should be on compliance with the new Tax are actually governed by the Act, how various
Administration Act (TAA) that came into ef- into effect on 1 countries are expected to comply with FATCA
fect on 1 October 2012, because penalties for and more flexible registration and documentation
non-compliance are onerous to say the least. October 2012” requirements.
Read more, see TaxTalk website: Read more, see TaxTalk website:
www.taxtalk.co.za www.taxtalk.co.za
“Importers unaware of Tax treaty with South Africa
variation in Customs New alternatives for structuring investment into DRC
A
valuation treatment
of imported computer
software and programs tax treaty entered into between the Democratic Republic of Congo (DRC)
and South Africa is likely to promote South Africa as a hub for inward investment
may be overpaying into the DRC, says professional services firm PwC. “The tax treaty will provide
multinational companies with alternative investment opportunities in the DRC,” says
duties and VAT” Elandre Brandt, an International Tax Director at PwC and Head of PwC’s Africa Tax
Desk based in Johannesburg.
says Deloitte Until recently, the DRC had entered into only one Double Taxation Agreement
(DTA) tax treaty (with Belgium). On 18 July 2012, the DRC doubled this number
when its DTA with South Africa came into effect. “When a foreign company holds its
DRC investment through South Africa, the treaty and South Africa’s attractive hold-
South African importers of certain types of ing company regime may reduce the tax cost of doing business in the DRC,” explains
software and related computer programmes, Brandt.
if they take time to examine customs legisla- Read more, see TaxTalk website: www.taxtalk.co.za
tion, could find themselves saving significant
amounts of money on customs duties and
VAT, says Deloitte. This is because many “Until recently, the DRC had
importers, unaware of the provisions of key
legislation, may be overstating the customs entered into only one Double
value of computer programs that they are
bringing into the country, says Deloitte Taxation Agreement (DTA)
director in Taxations Services – Customs, Jed
Michaletos. tax treaty (with Belgium)”
Read more, see TaxTalk website:
www.taxtalk.co.za
06 TaxTalk
The Distribution Of Shares In An Unbundling
Transaction – Binding Class Ruling 37
Danielle Botha, Associate, Tax,
Cliffe Dekker Hofmeyr
BCR 37, dated 23 January 2013, dealt with the ques-
tion of whether the transfer of equity shares in an un-
bundling transaction will be exempt from dividends
tax and securities transfer tax (STT) in the hands of
the shareholder.
The Applicant was a listed public company and
the Co-Applicant a private company, both of which
were incorporated as residents in South Africa. The
Co-Applicant was a wholly-owned subsidiary of the
Applicant. The Applicant wanted to transfer its shares
in the Co-Applicant to its own shareholders. Subse-
quent to the transfer of the equities to the Applicant’s
shareholders, the Co-Applicant would establish a pri-
mary listing on the Johannesburg Stock Exchange and
a secondary listing on the New York Stock Exchange
of depository receipts, which could potentially have
affected the application of s46 of the ITA
Read more, see TaxTalk website: www.taxtalk.co.za
TaxTalk 07
News
Global Tax
News
New Zealand Backs OECD Tax Work
Mary Swire, Tax-News.com, Hong Kong
N
said that he believed it was "a good starting
point for member states to confront the
matter and develop a shared view of ways to
ew Zealand's Revenue Minister deal" with the issue. Dunne has been pressing
has backed the Organization of Economic for closer co-operation with the OECD on
Co-operation and Development's (OECD's)
call for member countries to develop a
international taxation, and recently stated
that New Zealand would "closely align" itself
“It is not going to be
shared response to the question of taxing
large multinational companies.
with the organization on the matter.
"The OECD work will help New Zealand
an overnight remedy
The OECD released a new report last week
on the use of tax-efficient business structur-
and other countries to identify weaknesses in
their rules and to ensure that international
– that is simply not
ing by multinationals to lower group corpo-
rate tax liability. The report concluded that
tax frameworks keep pace with new business
models," Dunne pointed out.
possible”
due to imperfect interaction between nations' He has great hopes for international col-
tax regimes, and their extensive networks of laboration: "It is not going to be an overnight
double tax agreements, the global tax system remedy – that is simply not possible. But
has failed to keep pace with the changing with nations co-operating in this way, we will
needs of the 21st century in terms of mitigat- develop a sound set of tax policies which will
ing corporate tax avoidance. mean that the days of large multinationals
Commenting on the report, Peter Dunne escaping taxation will be numbered."
France Mulls
Environmental Tax On Cigarette Stubs
Ulrika Lomas, Tax-News.com, Brussels
French senators have recently France. Potentially, 70 billion Given the principle of "pol- tax would be levied until the
submitted a legislative proposal cigarette butts are disposed of in luter pays," it therefore seems problem is finally resolved, the
advocating the introduction of the environment each year, the appropriate that a tax is intro- senators stressed, underlining
an environmental tax imposed senators argued. duced to finance efforts to deal the fact that it would be the re-
on cigarette butts, payable by Alluding to the fact that envi- with the problem, in the form of sponsibility of tobacco manu-
tobacco manufacturers. ronmental associations have for a tax levied at source on tobacco facturers to propose alternative
Justifying their proposal, the a long time been calling for the manufacturers, the senators said. scientifically proven solutions.
senators explained that 53 billion issue to be addressed, the sena- The senators suggested that a Under the proposal, a third
cigarettes are sold through tors insisted that pressure from tax of 0.05 cent per cigarette, or of the product of the tax would
official channels each year in local authorities in France is now 1 cent per packet of 20 ciga- flow to local authorities in
France and a further 15 to 18 also mounting, particularly as a rettes, be imposed annually on France to finance environmental
billion cigarettes sold abroad result of the rising costs linked to manufacturers and importers on operations.
are subsequently consumed in the new source of pollution. the basis of volumes sold. The
08 TaxTalkFrance Unveils National Plan To Fight Tax Evasion
Ulrika Lomas, Tax-News.com, Brussels
French Prime Minister Jean-Marc Ayrault tax matters (ETNC), as provided for in the
has recently approved a national plan aimed country’s general tax code (article 238-0 A).
at coordinating efforts to combat tax fraud Secondly, the Government plans to launch
and tax evasion in France in 2013. a consultation with stakeholders on the
The moves announced at a gathering creation of a list of life insurance contract
of the national committee responsible for policyholders, to be used as an "essential
combating fraud in France (CNLF) include instrument" in combating money laundering
plans notably to monitor the efficiency of the in particular.
implementation of signed bilateral tax agree- Further, a consultation will be launched
ments and to further limit cash payments for shortly to ensure that a decree and legislative
both residents and non-residents. measures are adopted by the end of 2013
The French Government intends to ensure providing for a reduction in the threshold for
more effective implementation of bilateral t cash payments from EUR3,000 (USD4,009)
ax agreements, namely by assessing the currently to EUR1,000 per purchase for
effectiveness of the exchange of fiscal infor- residents and from EUR15,000 to EUR10,000
mation between the relevant foreign and per purchase for non-residents. The Govern-
domestic tax authorities. This is to constitute ment highlights the fact that similar mea-
a key objective for France at EU, OECD and sures have been successfully implemented in
G20 level. both Italy and in Spain in the last few years.
Indeed, the existence of signed bilateral Finally, the Government plans to control
tax treaties together with the effectiveness transfer pricing better and to reflect on new
of their implementation will be the two methods of corporate reporting to reduce
criteria taken into account when establishing the cost of tax audits and to improve fiscal
the next so-called "black list" of states and predictability.
territories deemed to be non-cooperative in
Italian Business Taxpayers Feel ‘Persecuted’
Ulrika LomaS, Tax-News.com, Brussels
A
Equitalia, the tax collection agency. All of the in-
stitutions (not to mention those involved in health
nationwide poll of 2,500 businesses by and safety at work) may raise questions throughout
Confedercontribuenti, an association of Italian “The current the year.
taxpayers, has found that they are being harassed The survey also showed that 76% of business
in their dealings with the country’s complex tax system is said to owners begin their working day with the worry
system, which is viewed as extremely complex of receiving a visit from some inspecting body or
and persecutory. need effective another, or of a communication received relating to
With the added problem that Italy lacks a supposed irregularity from a tax authority.
efficient and independent tax courts, the survey simplification, a What emerges from the survey, said Carmelo
points out that the corporate taxpayer in Italy Finocchiaro, Confedercontribuenti’s President, is a
is now assailed by notices, assessments and tax rationalization serious obstacle to the development of businesses.
bills from the system’s various tax authorities and Their owners, forced to resolve a series of other
collectors. On average, each company receives of the agencies obligations, have had to reduce the time they can
about 29 annual alerts regarding its obligations spend on production and on business development.
to various institutions. involved in The association is asking the new Parliament,
Above all, it is calculated that it takes each after the general election, to address the issue of
business an average of about 250 hours per year investigations, and business taxation in a decisive manner. The current
to resolve the issues raised by the total of 13 dif- system is said to need effective simplification, a
ferent institutions responsible for the Italian tax a serious reform of rationalization of the agencies involved in investi-
and social security system – from INPS to INAIL gations, and a serious reform of the tax courts. The
(the social security and insurance institutions), the tax courts” current “vexatious system weighs more than the
from the Italian Revenue Agency to the Guardia enormous tax burden it supports. Its change can no
di Finanza (the Italian financial police), and to longer be delayed.”
TaxTalk 09News
CoUNTRIES WITH
No Income Tax
Perhaps it is no coincidence that one of the meanings of the word “tax”
is to “apply a burden,” as in “he’s taxing my patience.” Taxes have been a
part of the global fabric as far back as the ancient Egyptians, and govern-
ments always have used taxes to maintain civil order, pay for services and
provide for a nation’s security in time of war ~ Richard Morgan
Rajeshni Naidu-Ghelani, CNBC.com
T o paraphrase Benjamin Franklin: The
only things certain in life are death and taxes.
And sure enough, millions around the world
file taxes every year.
Personal income taxes are a huge source
of revenue for governments globally. But,
there are some countries where you can be
100 percent certain that you don’t have to
pay income tax. We’ve put together a list of
countries that have no income tax, based on
KPMG’s 2011 survey of 96 countries. Some
of the countries are well-known tax havens,
while others have managed to use natural
resources to fund government expenses.
United Arab Emerates
The United Arab Emirates has one of the government statistics.
world’s highest per-capita incomes, $48,200, While expatriate employees don’t pay for “While there is no
and has no personal income or capital social security in the Arab country, UAE
gains taxes. citizens must make monthly contributions income tax in the
Instead of generating revenue from income of 5 percent of their total earnings for social
tax, the country, which is the third-biggest security. Employers of citizens also have to country, Kuwaiti
exporter of crude globally, is dependent on make monthly contributions of 12.5 percent
taxes from oil companies that pay up to 55 of the worker’s base salary for social security nationals must
percent in corporate taxes. Foreign banks pay and pensions. Other indirect taxes include
about 20 percent. Oil revenue, for example, housing fees, road tolls and municipal taxes. contribute 7.5 percent
accounted for 80 percent of consolidated The UAE charges a 50 percent tax on alcohol,
government income in 2010, while income and if a person has a liquor license and buys of their salary for social
from various taxes, fees and customs duties alcohol to drink at home, an additional 30
made up less than 12 percent, according to percent tax is charged. security benefits”
10 TaxTalkThe Bahamas
A mong the wealthiest Caribbean countries, the Bahamas
features an economy that’s heavily dependent on tourism and offshore
banking.
About 70 percent of government revenue comes from duties on
imported goods. Even though there is no personal income tax, em-
ployees have to contribute 3.9 percent of their salary, up to a maxi-
mum of $26,000 annually, for a form of social security called National
Insurance. Employers also have to contribute 5.9 percent of a worker’s
salary for National Insurance, while self-employed individuals are
charged 8.8 percent. The country also has a property tax of up to 1
percent. Despite its prosperity as a financial center, The Bahamas
has an unemployment rate of 15 percent and the political parties are
feuding over oil exploration projects in its waters that could come at
the cost of tourism.
Cayman Kuwait
Islands As the world’s sixth-largest oil warned Kuwait in May that such
exporter, Kuwait’s oil revenue of spending could impact the sus-
$63.5 billion between April and tainability of its public finances .
Well known as an offshore financial center, the Cayman November of last year, accounted Only 7 percent of Kuwaitis work
Islands are a big draw for the wealthy with its zero for 95 percent of the its total in the private sector, and rising
personal income and capital gains taxes and because it revenue in the period. retirement costs could put pres-
has no mandatory social security contributions. While there is no income tax sure on government spending.
Employers, however, are required to provide a in the country, Kuwaiti nationals Kuwait is no stranger to politi-
pension plan for all workers, including expatriates who must contribute 7.5 percent of cal turmoil, ushering in four new
have been working for a continuous nine months in the their salary for social security parliaments in the past six years.
islands. While there is no value added tax or govern- benefits; their employers make The country has been marred
ment sales tax, the country does have some indirect an 11 percent contribution. with corruption scandals impli-
taxes such as import duties, which can range up to Despite being one of the world’s cating key political figures, while
25 percent. wealthiest countries per capita, poor parliament-government
A high standard of living in the Caymans also means strikes and protests by public relations have hampered policy-
high property prices. The average cost of an apartment sector workers unhappy about making. The IMF has recom-
in April was over $550,000, while the average cost of a pay have led the government to mended that Kuwait introduce a
house was more than $736,000, according to govern- introduce a 25 percent increase value-added tax and comprehen-
ment figures. in wages. The IMF, however, sive income tax system.
Oman
Like neighboring Middle Eastern countries, Oman Despite its oil wealth, Oman has recently been
derives the majority of its revenue from crude oil. rocked by a series of protests by residents demand-
The country’s oil revenues increased 35 percent ing jobs and employment benefits. Several strikes at
in April to $8.49 billion compared to the same petroleum plants over pay and pensions have seen
month last year and accounted for over 71 percent activists jailed in the biggest labor strife in Oman
of the sultanate’s total revenues. Although, there since protests vagainst corruption and unemploy-
is no individual income or capital gains taxes in ment triggered by the Arab Spring. There’s growing
Oman, citizens must contribute 6.5 percent of resentment in the country over the jobs offered to
their monthly salary for social security benefits. 800,000 expatriates, while the unemployment rate
A stamp duty of 3 percent is also charged on the for citizens was 24.4 percent in 2010 and is rising,
purchase of property. according to the International Monetary Fund.
TaxTalk 11Shifts
in the
industry
Learn. Grow. ExcelL
T ax practice is a dynamic
profession, providing vast opportunities
for continuous learning, facilitating
individual growth and in turn offering
opportunities to excell in leading roles,
spanning from tax compliance, risk
management, to Chief Financial Officer
and other executive member of the board.
“My time spent at
KPMG gave me
valuable insight into
the tax consulting
environment and a
particular insight
17 into advising on large
transactions”Career
CHANGE
TaxTalk is pleased to showcase the first of our “Shifts in the Industry” features , in
this section we aim to keep our readers up to date with the people from our industry
who are on the move. In this issue, we feature two new exciting new appointments
at the SAIT, Sharon Smulders and Ronel De Kock, both of whom joined the SAIT in
February 2013. We also feature three new appointments in the tax department at
KPMG, Collette Jeppe, Melanie Le Roux and Letitia Raats
Ronel De Kock
Head of Education, SAIT
R onel joined the South African Institute
of Tax Practitioners (SAIT) on 1st February 2013.
Her function at SAIT is as Head of Education and
her primary responsibility will be to implement
the tax learnership and the Tax Professional oc-
cupational qualification. The new learnership for
tax professionals that is currently being developed
is an important learning pathway that will help to
increase the number of specialised tax profession-
als to serve the South African economy and to
enhance the quality of tax services provided to the Professor Sharon Smulders
public by private practitioners and by the South Head of Tax Technical & Research, SAIT
African Revenue Service (SARS).
Ronel has qualified as a Chartered Accountant
and Master Tax Practitioner. She completed her Sharon has been appointed as the Head of Tax Technical & Research at the South African
articles at international audit firm PWC in Sun- Institute of Tax Practitioners (SAIT) with effect from 1 February 2013. She is primarily
ninghill, and then joined PWC taxation services responsible to liaise with SARS, National Treasury, Parliament and international organisa-
where she specialised in the Audit of Payroll taxes. tions on all tax policy matters. In addition, Sharon has also received the SAIT visiting tax
Prior to joining SAIT, Ronel was a senior professor chair at the University of the Western Cape.
lecturer at the University of Pretoria and her Prior to joining SAIT, Sharon was an associate professor in taxation with the University
academic responsibilities included the lecturing of of Pretoria where she lectured taxation on both under-graduate and post-graduate levels.
administration and audit of taxation on both un- Amongst others, she has presented workshops to SARS, ACCA, KPMG and BDO. She
dergraduate and post-graduate level. She started has also assisted the World Bank in 2006-2007 and SARS in 2011-2012 with quantitative
her academic career in the Department of Au- research on the tax compliance burden for small businesses. Her research with the World
diting where she lectured on both the Chartered Bank led to tax legislation amendments in 2008. Prior to joining academia, she was a
Accountant and Internal Auditing programmes. manager in the taxation department of Deloitte in Pretoria. She has a very keen interest
Ronel joins the SAIT at a crucial time when the in small business taxation which developed into her masters and doctoral studies. She
SAIT is at the forefront of education in the tax has also published accredited research articles on this topic and presented her research
industry . findings at various international and national conferences.
14 TaxTalkReaders Questions
I would like to purchase shares online via a company based in Cyprus. I am a South African tax
resident. I will pay for the shares through the South African branch office of the company which markets
the shares. The company has a bank account in South Africa. The shares that I will purchase will be
foreign shares and I will pay for these shares from my local bank account. Will a tax clearance certificate
be required for any funds deposited into the local bank account? If I make a profit on the shares, would I
then be liable for CGT on those profits?
Answer
1. Local SA tax resident deposits money into a local SA account – no Tax Clearance required if the
amount is under the R4m threshold and the funds are being deposited into a local account. When
the local branch transfers the money outward the branch would need tax clearance and at that stage
depending on the nature of the share purchase could require a Tax Clearance. However if the local
branch is purchasing the shares itself then it would be the same as investing a fund which invests
offshore so no clearance required.
2. If the reader owns the shares in his own name then there will be a CGT implication on the sale of for-
eign shares, as SA tax residents are subject to CGT on worldwide capital asset disposals. In addition,
as Cyprus has no CGT tax on the sale of shares there will be no foreign tax credit relief. Dividends
received on the foreign shares will be subject to 15% foreign dividends tax, but there is a R3 700
exemption. Ordinarily if one buys foreign shares and sells them then they are subject to CGT if the
perception is that the taxpayer is not seen to be trading in shares which would therefore be a revenue
transaction for which he would be subject to tax at normal personal tax rates.
Marc Sevitz CA (SA) B. Comm, PG Dip.
Tax Law | Director www.taxtim.com
The fastest, easiest way to do tax
KPMG takes pleasure in welcoming the
following appointments to Tax and Legal:
Colette Jeppe
Colette Jeppe joined International Executive Services as a Senior Tax Consultant in Febru-
ary. She has experience in UK and SA income taxation and has worked at KPMG in SA
and UK. Colette was employed by PWC UK until 2010 and rejoins KPMG after taking a
break from the inudstry to become a full time mother.
Melanie Le Roux
Melanie Le Roux joined Corporate Tax on the February 2013, as an Associate Director.
Melanie was previously employed for five years at KPMG Corporate Tax and rejoins us
from E & Y where she was employed as an Associate Director.
Letitia Raats
Letitia Raats joins International Executive Services in March as a Tax Consultant. Letitia
joins us from E & Y where she was employed as a Tax Consultant. In addition to her LLB
degree, Letitia has her H. Dip in Tax Law as well as her H Dip in International Tax.
Melanie Le Roux
TaxTalk 15Profile ANDREW LEWIS, Senior Associate
A
Cliffe Dekker Hofmeyr tax practice with Professor
Emil Brincker from an early stage in my career is
BACKGROUND an example of one such opportunity.
ndrew Lewis is a senior associate in our
ANDREW LEWIS Tax practice. He has advised clients on various do- During your two year graduate pro
mestic and international tax issues. Andrew began gramme, were you based in South
his career as a candidate attorney with Cliffe Dek- Africa? Did you focus on any particular
ker (now Cliffe Dekker Hofmeyr) in January 2008 section of tax?
Education and was appointed as an associate in January 2010
BCom (Law) LLB LLB and was promoted to senior associate in 2012. Pri- During the two year tax graduate programme
or to this he was part of the two year KPMG tax offered by KPMG, I rotated between the corporate
HDip. (Tax), University graduate programme in which he spent roughly a tax and international tax departments. My time
of Johannesburg year in both the corporate and international spent at KPMG gave me valuable insight into
Year of admission as an tax departments. the tax consulting environment and a particular
insight into advising on large transactions.
attorney: 2010 You have had almost a “fast track” from
being a candidate attorney in 2008 and If so, what would you say your greatest
Memberships then appointed as an associate in 2010, achievement was during this time?
then a Senior Associate in 2012. what do
Law Society of the you attribute this to? The work experience during the graduate
Northern Provinces programme, along with completing my Higher
I have just finished reading a book written by Diploma in Tax Law, provided me with a great
Malcolm Gladwell titled – Outliers: the Story of platform from which to launch my career in tax.
Practice areas Success. In Outliers, Gladwell analyses the factors One of my greatest achievements in more recent
Tax that play a role in a person’s successes. In line with times outside of the work place was to complete
some of his thinking, I would tend to attribute any the up and down run of Comrades Marathon.
success to date to the many hours spent learning
Languages the law (in line with the “10 000 Hour Rule”), What is your particular area of (tax) inter-
English being fortunate enough to be presented with est at this point of your career?
opportunities that have allowed me to develop
quickly as a tax practitioner and having a strong My particular area of focus at this stage is corpo-
family support system. Being able to work in the rate and international tax advice. However, I am
16 TaxTalkpursuing further studies to expand my knowledge
on the company law aspects of the transactions
that I advise on from a tax perspective.
Do you intend to study further, if so, what
qualification would you pursue?
self considering the same problem. It does take a
I have enrolled for the Advanced Company Law I while to come to grips with the complex tax prin-
& II course offered by the University of the Wit- ciples and constant updates to the tax legislation.
watersrand (Mandela Institute) which covers key So I would say be patient, work hard, research the
aspects of the new Companies Act and its integra- “My time spent issues fully and enjoy applying your mind like you
tion into the existing company law environment. have never done before.
Many of the transactions that I am involved in at KPMG gave
require an understanding of our company law and SARS have identified several high priority
having a better understanding of company law can me valuable areas in their compliance programme
only make you a better all-round tax practitioner. (issued 2012), Transfer Pricing being one
insight into the of the major areas. Have you had any
What would you say are the highs and experience in this area? If not, what other
lows of a career in tax? tax consulting areas have you had experience in?
Some of the highs of my career in tax so far in- environment I have definitely seen an increased focus by the
clude being admitted as an attorney, contributing South African Revenue Service (SARS) on transfer
towards two chapters of the Silke on International and a particular pricing matters with more and more queries being
Tax publication, working with some of the best raised by SARS on these issues. I am currently as-
minds in the business and being stretched mental- insight into sisting in a transfer pricing dispute from a dispute
ly on a daily basis. resolution perspective. The difficulty in transfer
advising on large pricing disputes is that, in many instances, there is
What advice would you give to someone more than one arm’s length price.
entering the world of tax? transactions”
Have you published any articles relat-
The world of tax provides a vast array of areas that ing to tax, if so, where have they been
you can specialise in and you will never find your- published?
TaxTalk 17Continuing Professional
Development
What's the fuss?
I often contribute towards our weekly DLA Cliffe
Dekker Hofmeyr Tax Alert, which discusses the Sylvia Motaung, SAIT CPD officer
latest develops in the tax arena. This year I have
written articles on the issue of whether legal pro-
fessional privilege may be extended to apply to ac-
countants (or other advisors) providing tax advice
and whether the non-discrimination Article of a
T
treaty may be applied in the context of section 45
of the Income Tax Act, pursuant to an interesting increasing number of people recognise
UK case of Revenue and Customs Commissioners the benefits of adopting a structured
FCE Bank plc [2012] EWCA Civ 1290. approach to post-qualification learning.
I have also had articles published in various he world in which tax profession- Commitment to CPD is also an
business publications and online news sites. als practise is changing. The imminent acknowledgement that becoming profes-
In 2010 I co-authored the chapter, “Jurisdic- regulation of tax practitioners, effective sionally qualified is not an end in itself
tion to Tax”, with Professor Alwyn de Koker and from 1 July 2o13, introduce a statutory - it is merely the beginning. Updating
authored the chapter on “Residence” from a South requirement in the Tax Administration skills and knowledge on a continuing
African and an International Tax perspective for Act, 2011 (as amended) to follow a basis is essential to career progression,
the Silke on International Tax publication, avail- programme of continuing professional particularly given the passing of the 'job
able electronically on LexisNexis. development (‘CPD’). for life' and rigorously-defined career
In addition to the legal statutory path cultures.
Do you intend to concentrate on any requirement going forward, the global The SA Institute of Tax Practitioners
particular area of Tax? competition has never been more developed a policy for continuing
intense. Tax professionals’ clients are professional development for tax
While I have advised on most areas of tax law, my
particular focus is corporate tax advice from a
domestic as well as an international tax perspec- “These changes demand ever-evolving
tive, advising on and implementing different
employee share schemes and have assist clients on knowledge, skills and understanding and an
various litigious matters, which appear to be on
the increase of late. increasing demonstration of commitment to
Regulation of Tax Practitioners- com- lifelong professional learning”
mencing July 2013, what are your
thoughts on this and will your member- becoming more knowledgeable and professionals. The Institute serves the
ship of the Law Society of the Northern more demanding. Technology contin- public interest by helping to raise the
Province cover this? ues to affect all aspects of our lives. The effectiveness of professionals through the
knowledge-base of professions, and of promotion of CPD as an important and
The Law Society of the Northern Province is rec- the sectors in which they operate, has integral element of lifelong learning.
ognised as a controlling body for purposes of the also increased. With such developments
Tax Administration Act and lawyers subject to the come new opportunities: new clients, 2013 CPD policy
control of a recognised law society are not new markets, new areas of practice and
required to register with a further recognised new methods of working. These changes • 10 hours of verifiable output, i.e. ver-
body (like the South African Institute of demand ever-evolving knowledge, skills ified through assessment, tax update
Tax Practitioners). and understanding and an increasing CPD activities and hours per annum
I certainly believe that the regulation of tax demonstration of commitment to life- • 20 hours of verifiable input, i.e. atten-
practitioners is a positive step that may give long professional learning. dance, other tax CPD activities and
taxpayers a level of comfort that their tax advisers All tax professionals are assumed to hours per annum
have a minimum level of qualifications/experi- be technically competent. Indeed, in • 10 hours of non-verifiable input, i.e.
ence and have to adhere to disciplinary codes and our knowledge-intensive world some reading articles, tax CPD activities
procedures as well as a code of ethics and conduct. have argued that the only real source of and hours per annum
However, the new regulation of tax practitioners sustainable competitive advantage is the Visit the SAIT Professional Development
should be of no real concern (other than the ad- ability to recognise and adapt to these page – www.thesait.org.za for further
ditional administrative requirements) for tax prac- changes faster than the competition. information or contact the
titioners who already operate with a high-level of The commitment to keeping up to professional Membership Centre:
ethical standard and due regard for the law. date is growing in significance as an ojones@thesait.org.za
18 TaxTalk00 TaxTalk
Focus INtegrity. Education. reform
I n the 2012 Budget Speech tax practitioners came under attack for their low level of tax
compliance. The Minister of Finance Pravin Gordhan announced that South African tax
practitioners owe the South African Revenue Service (‘SARS’) in excess of R280m, total-
ling the 18 000 tax returns outstanding. The Tax Administration Act, 2011 was amended in
December 2012 and introduced the regulation of tax practitioners, recognising controlling
bodies to perform the regulatory function in collaboration with SARS. All tax practitioners
as defined in the Tax Administration Act, 2011 must register with recognised controlling
body before 1 July 2013, adhere to continuing professional development, abide by a code of
conduct specific to taxation and obtain a minimum qualification registered on the National
Qualifications Framework.
22
“Any tax practitioners
that do not yet belong
to any of these three
controlling bodies
may no longer act as
tax practitioners”REGULATION OF
TAX PRACTItiONERS:
some progress
DIRK KOTZE, from Mazars
T
Bill was never passed into law and tax practi-
tioners were regulated in a somewhat informal
manner through registration with SARS which
he background to the regulation of tax
practitioners spans more than a decade but seems
“Any tax entitled them to some privileges such as commu-
nication forums with SARS personnel, dedicated
to finally have found a home in the Tax Adminis-
tration Act (“TAA”) promulgated during 2012.
practitioners that practitioner call centres and newsletters to name
a few.
As early as 2002 the South African Revenue
Services (“SARS”) issued a discussion document
do not yet belong However, there was no formal regulation by
SARS or even various independent bodies to
regarding the regulation of tax practitioners,
citing various examples and cases of the concept
to any of these which tax practitioners may have belonged.
In fact, many tax practitioners were not even
from other countries. This was followed by the
introduction of section 67A into the Income Tax
three controlling required to belong to independent organisations
to facilitate communication, training or even
Act in 2004, setting out who tax practitioners are
and how they should register with SARS to be able
bodies may no discipline. As such, it may be said that while tax
practitioners were registered this was mainly in
to continue rendering their services.
From 2006 to 2008 SARS also issued various
longer act as tax order for them to offer services to their clients
rather than be properly regulated.
versions of the Regulation of Tax Practitioners Bill
with calls for comment. For better or worse, this
practitioners” The first steps to change this came with section
67A of the Income Tax Act being replaced with a
22 TaxTalkvery similarly worded section 240 of the TAA Act. have done in the past. As the registration with
Further guidance is now also provided in section these controlling bodies speaks to the livelihood
240A of the TAA, being amendments introduced of tax practitioners, care must be taken not to put
in 2012, and section 241. A requirement of the one’s tax practice at risk by failing to adhere to due
latest amended version of section 240 is that any professional care and conduct.
tax practitioner must belong to a controlling body. Therefore, while taxpayers should ensure their
At this stage the reason for the requirement for affairs are handled by competent tax practitioners,
an independent registration appears to be so that these practitioners must also institute actions and
SARS may lay complaints about the tax practi- processes whereby they can prove that they did
tioner to that controlling body. Whether this will not act in any of the manners described above.
be extended in the future to include training re- The only problem with the current legislation
quirements, setting different levels of competency is that section 240A defines only three controlling
and standards depending on the area of tax work bodies that already exist. It provides for fur-
conducted by the tax practitioner or channelling ther controlling bodies to be authorised by the
communication to tax practitioners through these Minister of Finance but to date this has not yet
bodies remains to be seen, but seems highly likely taken place. Strictly speaking, therefore, any tax
taking into account the content of the Regulation practitioners that do not yet belong to any of these
of Tax Practitioners Bill of the past. three controlling bodies may no longer act as tax
In terms of section 241 of the TAA, complaints practitioners. Alternatively, they must register
may broadly be made with regards to conduct with one of these three controlling bodies, if
that: they can.
• was intended to result in the taxpayer avoiding It is, however, doubtful whether SARS will apply
or postponing a valid tax liability; this strict regulation at this time and it is sub-
• by reason of negligence resulted in the taxpay- mitted that the current narrow application of the
er avoiding or postponing a valid tax liability legislation is only an oversight and is not intended
• or constitutes a contravention of the Rules of to remain as it is unpractical and will negatively
Conduct of that controlling body. affect a vast number of tax practitioners.
More specific actions by tax practitioners that may Tax practitioners should therefore review
result in being reported include: section 239 through section 241 of the TAA and
• not exercising due diligence in preparation of familiarise themselves with its content. Where
any tax filing due by the taxpayer to SARS; practitioners find that they do not belong to a de-
• unreasonably delaying any action by SARS; fined controlling body they must lobby with their
• providing opinions and advice contrary to institution to obtain authority from the Minister
clear law and legal precedent; of Finance to be viewed as a controlling body for
• being grossly negligent in respect of any work the purposes of the TAA.
performed for a taxpayer; It is quite possible that the regulation of tax
• knowingly providing false or misleading practitioners will follow the route of the financial
information in respect of the taxpayer; or services industry where regulation is extensive
• attempting to unfairly influence a SARS to ensure practitioner compliance for the benefit
official. of the client. However, in the case of tax practi-
In light of the Minister of Finance’s 2012 Budget tioners it may be that they are regulated to ensure
Speech comments regarding delinquent tax practi- compliance for the benefit of SARS, rather than
tioners, one can expect that SARS will apply its the taxpayer for which they act, although it can be
power of reporting more diligently than they may argued by some to be one and the same.
TaxTalk 23You can also read
