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Category:
News /
Regulatory
Bodies /
SA Revenue Services / January 2007
Aggressive tax structuring
Complete and reckless
disregard for tax morality and South African tax law
South Africa has recently experienced a
growing number of corporate reorganisations involving large South
African entities.
It
is acknowledged that these transactions serve as an indication of
growing investor confidence and provides substantial benefits for
the economy in the form of capital inflows and positive sentiment
created amongst both domestic and foreign investors.
However, on occasion these transactions
can, unfortunately, be structured in such a way that they also
result in significant negative implications for the country.
The South African Revenue Service has
become aware of certain transactions which are structured in such a
way that they show complete and reckless disregard for tax morality
and South African tax law.
Through elaborate structuring, these
deals seek to deliberately avoid the tax consequences that should
flow from the associated transactions thereby robbing not only the
fiscus of tax revenue, but all South Africans.
The South African Revenue Service gives
notice that it intends to carefully examine these transactions in
order to ensure that no impermissible tax loss occurs. The
architects of certain tax aggressive structures will not be
permitted to abuse South Africa’s tax provisions in ways clearly
unintended by the legislature. They will be vigorously challenged.
In certain instances, the South African
Revenue Service will be engaging with the relevant stakeholders
(including shareholders, investors and their advisors) involved in
particular deals to obtain an understanding of the stakeholders’
intentions and commitment to poverty alleviation and the overall
development of South Africa, and details of how the particular
structuring of their transaction supports this.
The South African Revenue Service calls
upon corporate leaders to take greater responsibility to ensure that
the advice that they pursue does not undermine South Africa’s tax
base and the compliance morality that we are successfully building
in the country.
We once again urge institutions
involved in designing aggressive tax schemes intended to abuse the
law and deprive the fiscus of its fair share of revenue to desist
from such schemes. These are the activities that lead to complexity
in our tax law.
Source: ITInews – Insurance
Times and Investments Online
www.itinews.co.za
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