International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

South Africa: Tax law changes and tax compliance requirements


Peter Dachs

Limitation on interest deductions

With effect from January 1 2015 certain limitations will be imposed on the deduction of interest incurred, inter alia, by debtors in the following instances:

  • where the creditor is in a controlling relationship with such debtor; or

  • where there is no controlling relationship but where the creditor has obtained funding from a person in a controlling relationship with the debtor; and

  • where the interest incurred is not, inter alia, subject to South African tax in the hands of the person to which the interest accrues.

These limitations may impact on transactions where foreign funding is obtained by South African borrowers from non-resident lenders. A non-resident lender would not be subject to tax if it qualifies for the domestic interest exemption or treaty relief.

Tax compliance requirements

Government Notice No 506 published in Government Gazette No 37767 on June 25 2014 (GN 506) stipulates who is required to furnish returns for the 2014 year of assessment, inter alia:

  • Every person who is personally or in a representative capacity liable to taxation under the Income Tax Act; and

  • Every company, trust or other juristic person, which is a resident, or every company, trust or other juristic person, which is not a resident which either:

  • carried on a trade through a permanent establishment in South Africa, or

  • derived any capital gain from a South African source or which derived service income from a South African source;

  • Every non-resident whose gross income consisted of interest from a source in the Republic to which the provisions of section 10(1)(h) of the Income Tax Act, do not apply.

The issue arises whether the phrase "liable to taxation under the Act" includes a non-resident that earns South African sourced income but is entitled to full treaty relief from South African tax.

In terms of a SARS private binding ruling, the exemption in respect of treaties comes in after gross income. This supports the view that a non-resident which qualifies for treaty relief would not have "income" as defined and should therefore not be "liable to tax" and accordingly not be required to submit a tax return for the 2014 tax year. It should be noted that a private binding ruling only has a binding effect on SARS in respect of the applicant or co-applicant for the ruling and no third party may rely on any such ruling.

Peter Dachs (

ENSafrica – Taxand Africa

Tel: +27 21 410 2500


more across site & bottom lb ros

More from across our site

Bartosz Doroszuk of MDDP offers insights on Poland’s new tax legislation on shifted profits, as the implementation deadline looms nearer.
Four tax specialists preview the UK’s transfer pricing requirements, which come into effect on April 1.
The rise of the QDMTT will likely change how countries compete on tax and transfer pricing policy, but it may not reverse decades of falling corporate tax rates.
ITR’s latest quarterly PDF is going live today, leading on the EU’s BEFIT initiative and wider tax reforms in the bloc.
COVID-19 and an overworked HMRC may have created the ‘perfect storm’ for reduced prosecutions, according to tax professionals.
Participants in the consultation on the UN secretary-general’s report into international tax cooperation are divided – some believe UN-led structures are the way forward, while others want to improve existing ones. Ralph Cunningham reports.
The German government unveils plans to implement pillar two, while EY is reportedly still divided over ‘Project Everest’.
With the M&A market booming, ITR has partnered with correspondents from firms around the globe to provide a guide to the deal structures being employed and tax authorities' responses.
Xing Hu, partner at Hui Ye Law Firm in Shanghai, looks at the implications of the US Uyghur Forced Labor Protection Act for TP comparability analysis of China.
Karl Berlin talks to Josh White about meeting the Fair Tax standard, the changing burden of country-by-country reporting, and how windfall taxes may hit renewable energy.