All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

South Africa resolves disputes with large institutions

The South African Revenue Service (SARS) expects to receive R3billion ($435million) after settling disputes with major institutions.

The disputes centre on cross-border transactions that the SARS considered to be unacceptable tax avoidance that eroded the South African tax base. The institutions claim to have acted in good faith.

The issue concerns transactions that aim to use tax treaties or relief measures in domestic law to generate tax benefits.

The benefits usually come from the tax relief claimed in excess of any economic double taxation that has occurred on post-tax dividends or interest income.

The tax benefits are usually shared between the institution and its foreign company through the pricings of transactions. These transactions typically lead to a financial loss for the institution in the absence of tax benefits.

Though for confidentiality reasons, the tax authorities did not reveal the names of the taxpayers, the SARS press release referred to structured finance litigation in New Zealand where four banks - BNZ, Westpac, ASB Bank and ANZ National - agreed a settlement of more than NZ$2.2 billion ($1.65 billion) with the Inland Revenue Department.

This suggests that the taxpayers in the settlements in South Africa were also from the financial sector.

More from across our site

Multinational enterprises run the risk of hefty penalties if the company in question fails to register for VAT when providing electronic services in South Africa.
Tax directors have urged companies to ensure they have robust tax risk management controls when outsourcing tax functions.
Japan reports a windfall from all types of taxes after the government revised its stimulus package. This could lead to greater corporate tax incentives for businesses.
Sources at Netflix, the European Commission and elsewhere consider the impact of incoming legislation to regulate tax advice in the EU – if it ever comes to pass.
This week European Commission officials consider legal loopholes to secure minimum corporate taxation, while Cisco and Microsoft shareholders call for tax transparency.
The fast-food company’s tax settlement with French authorities strengthens the need for businesses to review their TP arrangements and documentation.
The full ALP model will be adopted through a new TP regime, which is set to boost the country’s investments and tax certainty.
Tax professionals have called on the UK government to reconsider its online sales tax as it would affect the economy at the worst time.
Tax professionals have called on companies to act urgently to meet e-invoicing compliance targets as the EU plans to ramp up digitisation.
In the wake of India’s ambitious 25-year plan for economic growth, ITR has partnered with leading tax commentators to discuss what the future will look like for India and for the rest of the world.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree