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Differentiation does not automatically mean that a person's right to equality has been infrin... more Differentiation does not automatically mean that a person's right to equality has been infringed on. Thus, the mere fact that taxpayers are subject to different property tax rates in South Africa depending on the municipality in which the property falls does not necessarily result in an infringement of section 9 of the Constitution: a specific analysis is required in order to determine the constitutionality thereof. In this article, we examine whether the different rates applicable to properties based on where the property is situated are constitutionally sound vis-à-vis the right to equality. In order to do so, we compare the property tax rates and rebates that apply in respect of residential property in the capital cities of the nine provinces in South Africa. The first part of the article considers the general approach adopted by the courts in establishing whether section 9 of the Constitution has been violated. The second part discusses the legislative framework of property ...
Tydskrif vir Hedendaagse Romeins-Hollandse reg, 2021
Part B of Chapter 16 of the Tax Administration Act 28 of 2011 (“TAA”) provides for a voluntary di... more Part B of Chapter 16 of the Tax Administration Act 28 of 2011 (“TAA”) provides for a voluntary disclosure programme (“VDP”) in terms of which a defaulting taxpayer may correct her non-compliance by way of application for a voluntary disclosure agreement (“VDA”). In terms of the VDA the defaulting taxpayer can get relief in the form of remittance of understatement penalties (in accordance with section 223), remittance of non-compliance penalties, and a permanent stay of criminal prosecution (s 229). Obviously, to benefit from a VDA, the defaulting taxpayer must disclose the entire default complete in all material aspects (s 227(c)), and the taxpayer must do so voluntarily (s 227(a)). In Purveyors South Africa Mine Services (Pty) Ltd v Commissioner: South African Revenue Service (61689/2019) [2020] ZAGPPHC 404 (25 August 2020) (“Purveyors”) the meaning of “voluntary” for purposes of the VDP came into question. Specifically, the question arose whether a disclosure of facts that falls within the knowledge of the South African Revenue Service (“SARS”) is still a voluntary disclosure of a tax default. We criticise the court’s interpretation of the scope and application of sections 226 and 227 of the TAA. In addition, we dissect the meaning that the court attached to the word “voluntary” from a forensic linguistics perspective.
Part B of Chapter 16 of the Tax Administration Act 28 of 2011 (“TAA”) provides for a voluntary di... more Part B of Chapter 16 of the Tax Administration Act 28 of 2011 (“TAA”) provides for a voluntary disclosure programme (“VDP”) in terms of which a defaulting taxpayer may correct her non-compliance by way of application for a voluntary disclosure agreement (“VDA”). In terms of the VDA the defaulting taxpayer can get relief in the form of remittance of understatement penalties (in accordance with section 223), remittance of non-compliance penalties, and a permanent stay of criminal prosecution (s 229). Obviously, to benefit from a VDA, the defaulting taxpayer must disclose the entire default complete in all material aspects (s 227(c)), and the taxpayer must do so voluntarily (s 227(a)). In Purveyors South Africa Mine Services (Pty) Ltd v Commissioner: South African Revenue Service (61689-2019) [2020] ZAGPPHC 404 (25 Aug 2020) (“Purveyors”) the meaning of “voluntary” for purposes of the VDP came into question. Specifically, the question arose whether a disclosure of facts that falls within the knowledge of the South African Revenue Service (“SARS”) is still a voluntary disclosure of a tax default. We criticise the court’s interpretation of the scope and application of sections 226 and 227 of the TAA. In addition, we dissect the meaning that the court attached to the word “voluntary” from a forensic linguistics perspective.
In terms of section 187(1) of the Tax Administration Act 28 of 2011 (“TAA”), where a tax debt is ... more In terms of section 187(1) of the Tax Administration Act 28 of 2011 (“TAA”), where a tax debt is not paid in full by the effective date, the amount of the outstanding balance is subject to interest at the prescribed rate. Of course, where a senior official of the South African Revenue Service (“SARS”) is satisfied that the circumstances resulting in interest being charged on the tax debt is because of circumstances beyond the taxpayer’s control, the official may remit the interest so charged (s187(6) read with (7)). Prior to the enactment of the TAA, interest and the remittance of interest were regulated by the respective tax Acts. For purpose of the Value Added Tax Act 89 of 1991 (“VAT Act”), the position before and after 1 April 2010 must be distinguished. Before 1 April 2010, in respect of interest charged on the late payment of tax, the commissioner may remit the interest if he is satisfied that the non-payment of value-added tax (“VAT”) did not result in a financial loss to the state, or that the non-payment did not benefit the taxpayer financially (s 39(7) as it applied before 1 April 2010). The position after 1 April 2010 provides that interest may be remitted where the commissioner is satisfied that the non-compliance is due to circumstances beyond the taxpayer’s control (s 39(7)(a) as it applied from 1 April 2010 until 1 October 2012). In Medtronic International v CSARS (33400-2019) [2020] ZAGPPHC (15 February 2021) (“Medtronics”), the court was called upon to rule on whether or not a senior SARS official may remit interest in the case where the taxpayer has entered into a voluntary disclosure programme (“VDP”) with SARS. In this case note, we discuss Medtronics critically to consider whether interest in tax administration fulfils a penalty or a usury role. We also discuss the penalties that can be raised in the case of tax non-compliance and we consider whether or not the provisions in the TAA in respect of penalties, interest, and the remittance thereof are overly punitive in order to determine if the judgment in Medtronics is correct.
Chapter 13 of the Tax Administration Act 28 of 2011 (“TAA”) regulates tax refunds. Where a tax re... more Chapter 13 of the Tax Administration Act 28 of 2011 (“TAA”) regulates tax refunds. Where a tax refund is due to a taxpayer, the South African Revenue Service (“SARS”) must pay the refund (s 190(1)). However, where, because of a an ongoing and yet uncompleted verification, inspection, or audit, SARS is not obliged to make the payment of the refund (s190(2)). Yet, where, before the finalisation of the verification, inspection or audit, where the taxpayer has provided security for the tax refund in a form acceptable to the senior SARS official, SARS must authorise the payment (s190(3)). In Rappa (Pty) Ltd v Commissioner for the South African Revenue Service (20/18875)[2020] ZAGPPHC (5 November 2020)(“Rappa”), the court ruled that it is not necessary for a taxpayer to provide security equal to the value of the refund. In fact, SARS may authorise a partial release of the refund equal to the value of the security provided. In this case note, we examine the correctness of the court’s application of section 190. In addition, we consider the Canadian Tax Administration provisions to determine if the South African position in respect of refunds, the withholding of refunds, and the authorisation of refunds complies with international best practice.
Value Added Tax (“VAT”) is collected by VAT vendors on behalf of the South African Revenue Servic... more Value Added Tax (“VAT”) is collected by VAT vendors on behalf of the South African Revenue Service (“SARS”) on the supply of goods and services in the course and furtherance of that vendor’s enterprise (section 7(a) of the VAT Act 89 of 1991). The VAT vendor accounts for the VAT so collected as output VAT at the end of that VAT vendor’s period of assessment (sections 27,28 and 31of the VAT Act). Similarly, the VAT vendor may deduct from output VAT any input VAT expenditure incurred insofar as “the goods or services concerned are acquired by the vendor wholly for the purpose of consumption, use or supply in the course of making taxable supplies” (definition of “input tax” in section 1 read with section 17). The meaning of the phrase “for the purpose of consumption, use or supply in the course of making taxable supplies” has been considered by the South African courts on a few occasions with the most recent being the Supreme Court of Appeal (“SCA”) decision in Consol Glass (Pty) Ltd v The Commissioner for the South African Revenue Service (1010/2019) [2020] ZASCA 175 (“Consol”), which is the main point of discussion in this case note. Moreover, there is abundance of case law in the European Union to consider for possible guidance on the interpretation of the phrase “for the purpose of consumption, use or supply in the course of making taxable supplies”.
Potchefstroom Electronic Law Journal/Potchefstroomse Elektroniese Regsblad, 2011
PER / PELJ 2011(14)4 2. The intrinsic nature of the goods concerned should determine the VAT-abil... more PER / PELJ 2011(14)4 2. The intrinsic nature of the goods concerned should determine the VAT-ability thereof. Where the nature of the goods excludes it from the commercial sphere, like narcotics, it should not be subject to VAT. Where the illegal goods compete with a legal market the goods should be subject to VAT to eliminate unjust competition. 3. The principle of tax neutrality makes it clear that the illegality of a transaction has no influence on its taxability. The charging provision in terms of section 7(1) of the VAT act is not concerned with the legality of the transaction. If the transaction complies with the requirements for it to be taxed, it should be subject to VAT.
Comparative and International Law Journal of Southern Africa, 2016
Modern consumption tax systems, generally, differentiate between the supply of goods and services... more Modern consumption tax systems, generally, differentiate between the supply of goods and services. As the intrinsic nature of goods and services differ, different tax rules apply to tax the sale, transfer, supply, or consumption of goods and services. Changes in science and technology, and new and innovative business trends, often lead to transactions that escape the tax collector. For consumption tax purposes, a further distinction between the various types of goods and services is necessary in order to avoid the erosion of the tax base. Also, special tax rules apply to the different classifications of goods and services. This is particularly so in jurisdictions with variable tax rates. It is, therefore, key to classify the transaction or product appropriately to apply the appropriate tax rules and rates. This article compares the classification of the transfer of intellectual property rights for purposes of service tax and sales tax in India and the classification of the transfer ...
In terms of section 18(1)(b)(i) of the Income Tax Act 58 of 1962 a taxpayer is entitled to a qual... more In terms of section 18(1)(b)(i) of the Income Tax Act 58 of 1962 a taxpayer is entitled to a qualifying medical-expenses deduction for services rendered by a registered medical practitioner specifically listed in subparagraph (i). Since the promulgation of the Traditional Health Practitioners Act 35 of 2004 and the later Traditional Health Practitioners Act 22 of 2007 (which replaced the earlier unconstitutional act), section 18(1)(b)(i) has not been amended to provide a qualifying medical-expenses deduction to a taxpayer who consulted a traditional healer instead of a medical practitioner as listed in subparagraph (i). This article attempts to show that no such amendment is needed. The taxpayer can avail himself of the burden of proof to make a qualifying medical-expenses deduction for services rendered by a traditional healer by applying an expansive interpretation to the words "medical practitioner". This article furthermore discusses the interpretation problems as a result of the vague meaning of "professional services" and the subsequent possibility to deduct cosmetic expenses as qualifying medical expenses. Lastly, this article discusses the situation where a taxpayer wishes to make a qualifying medical-expenses deduction for schedule 2 medicines prescribed and supplied by a pharmacist, which, it seems, is not allowed. 4 Reference to "male" includes the "female" unless otherwise stated. 5
In a society in which consumers are regularly reminded of their rights and in which consumer righ... more In a society in which consumers are regularly reminded of their rights and in which consumer rights are protected at every cost, a constant question seems to be whether taxpayers, when dealing with revenue authorities, can be classified as consumers. Consumers may freely choose which suppliers they wish to support on the basis of client service, quality of goods and the type of consumer rights available to them.
Comparative and International Law Journal of Southern Africa, 2013
For VAT purposes, two issues arise when vouchers are used namely whether the time of supply is wh... more For VAT purposes, two issues arise when vouchers are used namely whether the time of supply is when the voucher was issued and imported (in the case of vouchers issued outside the Republic) into South Africa, or, when a voucher is exchanged for goods or services; and, secondly, whether VAT must be accounted for on the discounted amount paid for the voucher or the stated monetary value of the voucher. This article critically examines the VAT treatment of vouchers under the VAT Act (as it currently stands) with reference to the draft Interpretation Note on the VAT treatment of vouchers at a discount. It further analyses the Draft harmonised EU proposals on the VAT treatment of vouchers in the EU with a view to seeking a solution to the current South African uncertainties in respect of the time and value-of-supply rules when vouchers are issued.
With the Internet fast taking over our lives it is no surprise that the human race is exploring i... more With the Internet fast taking over our lives it is no surprise that the human race is exploring its capabilities to commit crimes. Although various crimes such as Internet fraud, hacking, cracking and alike are common crimes within the IT environment, certain offences seem unreal to be committed electronically.
The Value-Added Tax Act does not provide for specific place-of-supply-rules. Where these rules ha... more The Value-Added Tax Act does not provide for specific place-of-supply-rules. Where these rules have been incorporated into the Act, they have been couched in vague general terms not designed to meet the requirements of an electronic era. In terms of section 7(1)(c) of the VAT Act read with the definition of 'imported services' in section 1, VAT must be levied and accounted for on imported services in so far as the services are 'utilised and consumed' in the Republic.
Introduction Taxation of e-commerce is a global issue that cannot be resolved by adopting Value A... more Introduction Taxation of e-commerce is a global issue that cannot be resolved by adopting Value Added Tax (VAT) rules with extra-territorial powers in the absence of international treaties. Furthermore, where jurisdictions modernise their VAT rules in isolation and without having regard to international trends and inter-jurisdictional relationships, the modernisation is set for failure. The Organisation for Economic Co-operation and Development (OECD) is an international body that concerns itself with the promotion of policies that will improve the social and economic well-being of people around the world. It provides a forum for governments to work together, share experiences, and seek solutions to common problems. One of its various areas of research is the taxation (more specifically consumer taxes) on cross-border trade in services and intangibles.
In this analysis, I will focus on the possible unfairness of an objective test and explore the po... more In this analysis, I will focus on the possible unfairness of an objective test and explore the possibility of enforcing a subjective test where the VAT vendor's intention, in conjunction with other factors, should be applied in order to determine whether the VAT vendor qualifies for the input tax deduction.
The Value-Added Tax Act 89 of 1991 (VAT Act) does not provide for specific place-of-supply rules.... more The Value-Added Tax Act 89 of 1991 (VAT Act) does not provide for specific place-of-supply rules. Where these rules have been incorporated in the Act, they have been expressed in vague general terms (Charles de Wet & Riana du Plessis (2004) 'Taxation (VAT)' in Reinhardt Buys & Francis Cronje Cyberlaw@SA II: The Law of the Internet in South Africa 2 ed (2004) 279; M Botes 'South African VAT and non-resident business' (2011) 22 International VAT Monitor 396; Gregory Johnston & Sare Pienaar 'Value-Added tax on virtual world transactions: A South African perspective' (2013) 12(1) International Business and Economic Research Journal 71, available at http://journals.cluteonline.com/index.php/IBER/article/view/7513, accessed on 12 April 2013).
International passengers usually buy luxury goods such as perfume, liquor, electronics, cigarette... more International passengers usually buy luxury goods such as perfume, liquor, electronics, cigarettes, and fashion items at duty-free zones at international airports or boarding ports under the impression that these goods are stripped of all local and international taxes. The hustle and bustle at these duty-free zones should indicate the popularity of the tax incentive (see Frances Cha 'And the world's most lucrative airports are...' (2012) CNN Travel (14 June 2012), available at http://travel.cnn.com/explorations/shop/and-worlds-most-lucrative-airportsare-006206, accessed on 3 July 2013). It is well known that the incentive is based on the perception that the goods so purchased are intended for export and should, as a result, be stripped of local taxes in accordance with the destination principle applied in modern Value-Added Tax systems (see Liam P Ebrill The Modern VAT (2001) 15-16, 179-80).
It is a wellknown
principle that a taxpayer has the right to manage his affairs within the parame... more It is a wellknown principle that a taxpayer has the right to manage his affairs within the parameters of the law to his best advantage to pay the least amount of tax. This principle is further endorsed in the constitution. Section 22 of the Constitution of the Republic of South Africa, 1996 provides that every citizen has the right to choose their trade, occupation or profession freely. Section 25(1) provides that "no one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property". Accordingly, where a taxpayer has arranged his affairs within the ambit of existing laws, and without an active purpose of defrauding the relevant revenue authorities, a retrospective amendment to tax legislation prima facie infringes on that taxpayer's right to economic freedom and the right to property.
It is a wellknown
principle that a taxpayer has the right to manage his affairs within the parame... more It is a wellknown principle that a taxpayer has the right to manage his affairs within the parameters of the law to his best advantage to pay the least amount of tax. This principle is further endorsed in the constitution. Section 22 of the Constitution of the Republic of South Africa, 1996 provides that every citizen has the right to choose their trade, occupation or profession freely. Section 25(1) provides that "no one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property". Accordingly, where a taxpayer has arranged his affairs within the ambit of existing laws, and without an active purpose of defrauding the relevant revenue authorities, a retrospective amendment to tax legislation prima facie infringes on that taxpayer's right to economic freedom and the right to property. In Krok v Commissioner, South African Revenue Service (2015 (6) SA 317 (SCA)), the supreme court of appeal was called upon to rule on the correctness of a preservation order that was granted by the high court (Commissioner, South African Revenue Service v Krok 2014 (3) SA 453 (GP)) in terms of the doubletax agreement between the Republic of South Africa and Australia in respect of taxes that arose before the amendments to the agreement took effect. Simply put, the court was called upon to rule on the retrospective effect of the said amendments. In the course of the litigation the validity of the transfer of property situated in South Africa, but allegedly transferred under an agreement concluded in the British Virgin Islands, also had to be considered. The supreme court of appeal did not explicitly recognize this as a conflict of law or private international law problem and applied South African common law. The approach followed by the court will be critically evaluated.
Differentiation does not automatically mean that a person's right to equality has been infrin... more Differentiation does not automatically mean that a person's right to equality has been infringed on. Thus, the mere fact that taxpayers are subject to different property tax rates in South Africa depending on the municipality in which the property falls does not necessarily result in an infringement of section 9 of the Constitution: a specific analysis is required in order to determine the constitutionality thereof. In this article, we examine whether the different rates applicable to properties based on where the property is situated are constitutionally sound vis-à-vis the right to equality. In order to do so, we compare the property tax rates and rebates that apply in respect of residential property in the capital cities of the nine provinces in South Africa. The first part of the article considers the general approach adopted by the courts in establishing whether section 9 of the Constitution has been violated. The second part discusses the legislative framework of property ...
Tydskrif vir Hedendaagse Romeins-Hollandse reg, 2021
Part B of Chapter 16 of the Tax Administration Act 28 of 2011 (“TAA”) provides for a voluntary di... more Part B of Chapter 16 of the Tax Administration Act 28 of 2011 (“TAA”) provides for a voluntary disclosure programme (“VDP”) in terms of which a defaulting taxpayer may correct her non-compliance by way of application for a voluntary disclosure agreement (“VDA”). In terms of the VDA the defaulting taxpayer can get relief in the form of remittance of understatement penalties (in accordance with section 223), remittance of non-compliance penalties, and a permanent stay of criminal prosecution (s 229). Obviously, to benefit from a VDA, the defaulting taxpayer must disclose the entire default complete in all material aspects (s 227(c)), and the taxpayer must do so voluntarily (s 227(a)). In Purveyors South Africa Mine Services (Pty) Ltd v Commissioner: South African Revenue Service (61689/2019) [2020] ZAGPPHC 404 (25 August 2020) (“Purveyors”) the meaning of “voluntary” for purposes of the VDP came into question. Specifically, the question arose whether a disclosure of facts that falls within the knowledge of the South African Revenue Service (“SARS”) is still a voluntary disclosure of a tax default. We criticise the court’s interpretation of the scope and application of sections 226 and 227 of the TAA. In addition, we dissect the meaning that the court attached to the word “voluntary” from a forensic linguistics perspective.
Part B of Chapter 16 of the Tax Administration Act 28 of 2011 (“TAA”) provides for a voluntary di... more Part B of Chapter 16 of the Tax Administration Act 28 of 2011 (“TAA”) provides for a voluntary disclosure programme (“VDP”) in terms of which a defaulting taxpayer may correct her non-compliance by way of application for a voluntary disclosure agreement (“VDA”). In terms of the VDA the defaulting taxpayer can get relief in the form of remittance of understatement penalties (in accordance with section 223), remittance of non-compliance penalties, and a permanent stay of criminal prosecution (s 229). Obviously, to benefit from a VDA, the defaulting taxpayer must disclose the entire default complete in all material aspects (s 227(c)), and the taxpayer must do so voluntarily (s 227(a)). In Purveyors South Africa Mine Services (Pty) Ltd v Commissioner: South African Revenue Service (61689-2019) [2020] ZAGPPHC 404 (25 Aug 2020) (“Purveyors”) the meaning of “voluntary” for purposes of the VDP came into question. Specifically, the question arose whether a disclosure of facts that falls within the knowledge of the South African Revenue Service (“SARS”) is still a voluntary disclosure of a tax default. We criticise the court’s interpretation of the scope and application of sections 226 and 227 of the TAA. In addition, we dissect the meaning that the court attached to the word “voluntary” from a forensic linguistics perspective.
In terms of section 187(1) of the Tax Administration Act 28 of 2011 (“TAA”), where a tax debt is ... more In terms of section 187(1) of the Tax Administration Act 28 of 2011 (“TAA”), where a tax debt is not paid in full by the effective date, the amount of the outstanding balance is subject to interest at the prescribed rate. Of course, where a senior official of the South African Revenue Service (“SARS”) is satisfied that the circumstances resulting in interest being charged on the tax debt is because of circumstances beyond the taxpayer’s control, the official may remit the interest so charged (s187(6) read with (7)). Prior to the enactment of the TAA, interest and the remittance of interest were regulated by the respective tax Acts. For purpose of the Value Added Tax Act 89 of 1991 (“VAT Act”), the position before and after 1 April 2010 must be distinguished. Before 1 April 2010, in respect of interest charged on the late payment of tax, the commissioner may remit the interest if he is satisfied that the non-payment of value-added tax (“VAT”) did not result in a financial loss to the state, or that the non-payment did not benefit the taxpayer financially (s 39(7) as it applied before 1 April 2010). The position after 1 April 2010 provides that interest may be remitted where the commissioner is satisfied that the non-compliance is due to circumstances beyond the taxpayer’s control (s 39(7)(a) as it applied from 1 April 2010 until 1 October 2012). In Medtronic International v CSARS (33400-2019) [2020] ZAGPPHC (15 February 2021) (“Medtronics”), the court was called upon to rule on whether or not a senior SARS official may remit interest in the case where the taxpayer has entered into a voluntary disclosure programme (“VDP”) with SARS. In this case note, we discuss Medtronics critically to consider whether interest in tax administration fulfils a penalty or a usury role. We also discuss the penalties that can be raised in the case of tax non-compliance and we consider whether or not the provisions in the TAA in respect of penalties, interest, and the remittance thereof are overly punitive in order to determine if the judgment in Medtronics is correct.
Chapter 13 of the Tax Administration Act 28 of 2011 (“TAA”) regulates tax refunds. Where a tax re... more Chapter 13 of the Tax Administration Act 28 of 2011 (“TAA”) regulates tax refunds. Where a tax refund is due to a taxpayer, the South African Revenue Service (“SARS”) must pay the refund (s 190(1)). However, where, because of a an ongoing and yet uncompleted verification, inspection, or audit, SARS is not obliged to make the payment of the refund (s190(2)). Yet, where, before the finalisation of the verification, inspection or audit, where the taxpayer has provided security for the tax refund in a form acceptable to the senior SARS official, SARS must authorise the payment (s190(3)). In Rappa (Pty) Ltd v Commissioner for the South African Revenue Service (20/18875)[2020] ZAGPPHC (5 November 2020)(“Rappa”), the court ruled that it is not necessary for a taxpayer to provide security equal to the value of the refund. In fact, SARS may authorise a partial release of the refund equal to the value of the security provided. In this case note, we examine the correctness of the court’s application of section 190. In addition, we consider the Canadian Tax Administration provisions to determine if the South African position in respect of refunds, the withholding of refunds, and the authorisation of refunds complies with international best practice.
Value Added Tax (“VAT”) is collected by VAT vendors on behalf of the South African Revenue Servic... more Value Added Tax (“VAT”) is collected by VAT vendors on behalf of the South African Revenue Service (“SARS”) on the supply of goods and services in the course and furtherance of that vendor’s enterprise (section 7(a) of the VAT Act 89 of 1991). The VAT vendor accounts for the VAT so collected as output VAT at the end of that VAT vendor’s period of assessment (sections 27,28 and 31of the VAT Act). Similarly, the VAT vendor may deduct from output VAT any input VAT expenditure incurred insofar as “the goods or services concerned are acquired by the vendor wholly for the purpose of consumption, use or supply in the course of making taxable supplies” (definition of “input tax” in section 1 read with section 17). The meaning of the phrase “for the purpose of consumption, use or supply in the course of making taxable supplies” has been considered by the South African courts on a few occasions with the most recent being the Supreme Court of Appeal (“SCA”) decision in Consol Glass (Pty) Ltd v The Commissioner for the South African Revenue Service (1010/2019) [2020] ZASCA 175 (“Consol”), which is the main point of discussion in this case note. Moreover, there is abundance of case law in the European Union to consider for possible guidance on the interpretation of the phrase “for the purpose of consumption, use or supply in the course of making taxable supplies”.
Potchefstroom Electronic Law Journal/Potchefstroomse Elektroniese Regsblad, 2011
PER / PELJ 2011(14)4 2. The intrinsic nature of the goods concerned should determine the VAT-abil... more PER / PELJ 2011(14)4 2. The intrinsic nature of the goods concerned should determine the VAT-ability thereof. Where the nature of the goods excludes it from the commercial sphere, like narcotics, it should not be subject to VAT. Where the illegal goods compete with a legal market the goods should be subject to VAT to eliminate unjust competition. 3. The principle of tax neutrality makes it clear that the illegality of a transaction has no influence on its taxability. The charging provision in terms of section 7(1) of the VAT act is not concerned with the legality of the transaction. If the transaction complies with the requirements for it to be taxed, it should be subject to VAT.
Comparative and International Law Journal of Southern Africa, 2016
Modern consumption tax systems, generally, differentiate between the supply of goods and services... more Modern consumption tax systems, generally, differentiate between the supply of goods and services. As the intrinsic nature of goods and services differ, different tax rules apply to tax the sale, transfer, supply, or consumption of goods and services. Changes in science and technology, and new and innovative business trends, often lead to transactions that escape the tax collector. For consumption tax purposes, a further distinction between the various types of goods and services is necessary in order to avoid the erosion of the tax base. Also, special tax rules apply to the different classifications of goods and services. This is particularly so in jurisdictions with variable tax rates. It is, therefore, key to classify the transaction or product appropriately to apply the appropriate tax rules and rates. This article compares the classification of the transfer of intellectual property rights for purposes of service tax and sales tax in India and the classification of the transfer ...
In terms of section 18(1)(b)(i) of the Income Tax Act 58 of 1962 a taxpayer is entitled to a qual... more In terms of section 18(1)(b)(i) of the Income Tax Act 58 of 1962 a taxpayer is entitled to a qualifying medical-expenses deduction for services rendered by a registered medical practitioner specifically listed in subparagraph (i). Since the promulgation of the Traditional Health Practitioners Act 35 of 2004 and the later Traditional Health Practitioners Act 22 of 2007 (which replaced the earlier unconstitutional act), section 18(1)(b)(i) has not been amended to provide a qualifying medical-expenses deduction to a taxpayer who consulted a traditional healer instead of a medical practitioner as listed in subparagraph (i). This article attempts to show that no such amendment is needed. The taxpayer can avail himself of the burden of proof to make a qualifying medical-expenses deduction for services rendered by a traditional healer by applying an expansive interpretation to the words "medical practitioner". This article furthermore discusses the interpretation problems as a result of the vague meaning of "professional services" and the subsequent possibility to deduct cosmetic expenses as qualifying medical expenses. Lastly, this article discusses the situation where a taxpayer wishes to make a qualifying medical-expenses deduction for schedule 2 medicines prescribed and supplied by a pharmacist, which, it seems, is not allowed. 4 Reference to "male" includes the "female" unless otherwise stated. 5
In a society in which consumers are regularly reminded of their rights and in which consumer righ... more In a society in which consumers are regularly reminded of their rights and in which consumer rights are protected at every cost, a constant question seems to be whether taxpayers, when dealing with revenue authorities, can be classified as consumers. Consumers may freely choose which suppliers they wish to support on the basis of client service, quality of goods and the type of consumer rights available to them.
Comparative and International Law Journal of Southern Africa, 2013
For VAT purposes, two issues arise when vouchers are used namely whether the time of supply is wh... more For VAT purposes, two issues arise when vouchers are used namely whether the time of supply is when the voucher was issued and imported (in the case of vouchers issued outside the Republic) into South Africa, or, when a voucher is exchanged for goods or services; and, secondly, whether VAT must be accounted for on the discounted amount paid for the voucher or the stated monetary value of the voucher. This article critically examines the VAT treatment of vouchers under the VAT Act (as it currently stands) with reference to the draft Interpretation Note on the VAT treatment of vouchers at a discount. It further analyses the Draft harmonised EU proposals on the VAT treatment of vouchers in the EU with a view to seeking a solution to the current South African uncertainties in respect of the time and value-of-supply rules when vouchers are issued.
With the Internet fast taking over our lives it is no surprise that the human race is exploring i... more With the Internet fast taking over our lives it is no surprise that the human race is exploring its capabilities to commit crimes. Although various crimes such as Internet fraud, hacking, cracking and alike are common crimes within the IT environment, certain offences seem unreal to be committed electronically.
The Value-Added Tax Act does not provide for specific place-of-supply-rules. Where these rules ha... more The Value-Added Tax Act does not provide for specific place-of-supply-rules. Where these rules have been incorporated into the Act, they have been couched in vague general terms not designed to meet the requirements of an electronic era. In terms of section 7(1)(c) of the VAT Act read with the definition of 'imported services' in section 1, VAT must be levied and accounted for on imported services in so far as the services are 'utilised and consumed' in the Republic.
Introduction Taxation of e-commerce is a global issue that cannot be resolved by adopting Value A... more Introduction Taxation of e-commerce is a global issue that cannot be resolved by adopting Value Added Tax (VAT) rules with extra-territorial powers in the absence of international treaties. Furthermore, where jurisdictions modernise their VAT rules in isolation and without having regard to international trends and inter-jurisdictional relationships, the modernisation is set for failure. The Organisation for Economic Co-operation and Development (OECD) is an international body that concerns itself with the promotion of policies that will improve the social and economic well-being of people around the world. It provides a forum for governments to work together, share experiences, and seek solutions to common problems. One of its various areas of research is the taxation (more specifically consumer taxes) on cross-border trade in services and intangibles.
In this analysis, I will focus on the possible unfairness of an objective test and explore the po... more In this analysis, I will focus on the possible unfairness of an objective test and explore the possibility of enforcing a subjective test where the VAT vendor's intention, in conjunction with other factors, should be applied in order to determine whether the VAT vendor qualifies for the input tax deduction.
The Value-Added Tax Act 89 of 1991 (VAT Act) does not provide for specific place-of-supply rules.... more The Value-Added Tax Act 89 of 1991 (VAT Act) does not provide for specific place-of-supply rules. Where these rules have been incorporated in the Act, they have been expressed in vague general terms (Charles de Wet & Riana du Plessis (2004) 'Taxation (VAT)' in Reinhardt Buys & Francis Cronje Cyberlaw@SA II: The Law of the Internet in South Africa 2 ed (2004) 279; M Botes 'South African VAT and non-resident business' (2011) 22 International VAT Monitor 396; Gregory Johnston & Sare Pienaar 'Value-Added tax on virtual world transactions: A South African perspective' (2013) 12(1) International Business and Economic Research Journal 71, available at http://journals.cluteonline.com/index.php/IBER/article/view/7513, accessed on 12 April 2013).
International passengers usually buy luxury goods such as perfume, liquor, electronics, cigarette... more International passengers usually buy luxury goods such as perfume, liquor, electronics, cigarettes, and fashion items at duty-free zones at international airports or boarding ports under the impression that these goods are stripped of all local and international taxes. The hustle and bustle at these duty-free zones should indicate the popularity of the tax incentive (see Frances Cha 'And the world's most lucrative airports are...' (2012) CNN Travel (14 June 2012), available at http://travel.cnn.com/explorations/shop/and-worlds-most-lucrative-airportsare-006206, accessed on 3 July 2013). It is well known that the incentive is based on the perception that the goods so purchased are intended for export and should, as a result, be stripped of local taxes in accordance with the destination principle applied in modern Value-Added Tax systems (see Liam P Ebrill The Modern VAT (2001) 15-16, 179-80).
It is a wellknown
principle that a taxpayer has the right to manage his affairs within the parame... more It is a wellknown principle that a taxpayer has the right to manage his affairs within the parameters of the law to his best advantage to pay the least amount of tax. This principle is further endorsed in the constitution. Section 22 of the Constitution of the Republic of South Africa, 1996 provides that every citizen has the right to choose their trade, occupation or profession freely. Section 25(1) provides that "no one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property". Accordingly, where a taxpayer has arranged his affairs within the ambit of existing laws, and without an active purpose of defrauding the relevant revenue authorities, a retrospective amendment to tax legislation prima facie infringes on that taxpayer's right to economic freedom and the right to property.
It is a wellknown
principle that a taxpayer has the right to manage his affairs within the parame... more It is a wellknown principle that a taxpayer has the right to manage his affairs within the parameters of the law to his best advantage to pay the least amount of tax. This principle is further endorsed in the constitution. Section 22 of the Constitution of the Republic of South Africa, 1996 provides that every citizen has the right to choose their trade, occupation or profession freely. Section 25(1) provides that "no one may be deprived of property except in terms of law of general application, and no law may permit arbitrary deprivation of property". Accordingly, where a taxpayer has arranged his affairs within the ambit of existing laws, and without an active purpose of defrauding the relevant revenue authorities, a retrospective amendment to tax legislation prima facie infringes on that taxpayer's right to economic freedom and the right to property. In Krok v Commissioner, South African Revenue Service (2015 (6) SA 317 (SCA)), the supreme court of appeal was called upon to rule on the correctness of a preservation order that was granted by the high court (Commissioner, South African Revenue Service v Krok 2014 (3) SA 453 (GP)) in terms of the doubletax agreement between the Republic of South Africa and Australia in respect of taxes that arose before the amendments to the agreement took effect. Simply put, the court was called upon to rule on the retrospective effect of the said amendments. In the course of the litigation the validity of the transfer of property situated in South Africa, but allegedly transferred under an agreement concluded in the British Virgin Islands, also had to be considered. The supreme court of appeal did not explicitly recognize this as a conflict of law or private international law problem and applied South African common law. The approach followed by the court will be critically evaluated.
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In Medtronic International v CSARS (33400-2019) [2020] ZAGPPHC (15 February 2021) (“Medtronics”), the court was called upon to rule on whether or not a senior SARS official may remit interest in the case where the taxpayer has entered into a voluntary disclosure programme (“VDP”) with SARS. In this case note, we discuss Medtronics critically to consider whether interest in tax administration fulfils a penalty or a usury role. We also discuss the penalties that can be raised in the case of tax non-compliance and we consider whether or not the provisions in the TAA in respect of penalties, interest, and the remittance thereof are overly punitive in order to determine if the judgment in Medtronics is correct.
principle that a taxpayer has the right to manage his affairs within the parameters of the law to his best advantage to pay
the least amount of tax.
This principle is further endorsed in the constitution. Section 22 of the Constitution of the Republic of South Africa, 1996 provides that every
citizen has the right to choose their trade, occupation or profession freely. Section 25(1) provides that "no one may be deprived of property
except in terms of law of general application, and no law may permit arbitrary deprivation of property".
Accordingly, where a taxpayer has arranged his affairs within the ambit of existing laws, and without an active purpose of defrauding the
relevant revenue authorities, a retrospective amendment to tax legislation prima facie infringes on that taxpayer's right to economic freedom
and the right to property.
principle that a taxpayer has the right to manage his affairs within the parameters of the law to his best advantage to pay
the least amount of tax.
This principle is further endorsed in the constitution. Section 22 of the Constitution of the Republic of South Africa, 1996 provides that every
citizen has the right to choose their trade, occupation or profession freely. Section 25(1) provides that "no one may be deprived of property
except in terms of law of general application, and no law may permit arbitrary deprivation of property".
Accordingly, where a taxpayer has arranged his affairs within the ambit of existing laws, and without an active purpose of defrauding the
relevant revenue authorities, a retrospective amendment to tax legislation prima facie infringes on that taxpayer's right to economic freedom
and the right to property.
In Krok v Commissioner, South African Revenue Service (2015 (6) SA 317 (SCA)), the supreme court of appeal was called upon to rule on
the correctness of a preservation order that was granted by the high court (Commissioner, South African Revenue Service v Krok 2014 (3) SA
453 (GP)) in terms of the doubletax
agreement between the Republic of South Africa and Australia in respect of taxes that arose before the
amendments to the agreement took effect. Simply put, the court was called upon to rule on the retrospective effect of the said amendments.
In the course of the litigation the validity of the transfer of property situated in South Africa, but allegedly transferred under an agreement
concluded in the British Virgin Islands, also had to be considered. The supreme court of appeal did not explicitly recognize this as a conflict of
law or private international law problem and applied South African common law. The approach followed by the court will be critically evaluated.
In Medtronic International v CSARS (33400-2019) [2020] ZAGPPHC (15 February 2021) (“Medtronics”), the court was called upon to rule on whether or not a senior SARS official may remit interest in the case where the taxpayer has entered into a voluntary disclosure programme (“VDP”) with SARS. In this case note, we discuss Medtronics critically to consider whether interest in tax administration fulfils a penalty or a usury role. We also discuss the penalties that can be raised in the case of tax non-compliance and we consider whether or not the provisions in the TAA in respect of penalties, interest, and the remittance thereof are overly punitive in order to determine if the judgment in Medtronics is correct.
principle that a taxpayer has the right to manage his affairs within the parameters of the law to his best advantage to pay
the least amount of tax.
This principle is further endorsed in the constitution. Section 22 of the Constitution of the Republic of South Africa, 1996 provides that every
citizen has the right to choose their trade, occupation or profession freely. Section 25(1) provides that "no one may be deprived of property
except in terms of law of general application, and no law may permit arbitrary deprivation of property".
Accordingly, where a taxpayer has arranged his affairs within the ambit of existing laws, and without an active purpose of defrauding the
relevant revenue authorities, a retrospective amendment to tax legislation prima facie infringes on that taxpayer's right to economic freedom
and the right to property.
principle that a taxpayer has the right to manage his affairs within the parameters of the law to his best advantage to pay
the least amount of tax.
This principle is further endorsed in the constitution. Section 22 of the Constitution of the Republic of South Africa, 1996 provides that every
citizen has the right to choose their trade, occupation or profession freely. Section 25(1) provides that "no one may be deprived of property
except in terms of law of general application, and no law may permit arbitrary deprivation of property".
Accordingly, where a taxpayer has arranged his affairs within the ambit of existing laws, and without an active purpose of defrauding the
relevant revenue authorities, a retrospective amendment to tax legislation prima facie infringes on that taxpayer's right to economic freedom
and the right to property.
In Krok v Commissioner, South African Revenue Service (2015 (6) SA 317 (SCA)), the supreme court of appeal was called upon to rule on
the correctness of a preservation order that was granted by the high court (Commissioner, South African Revenue Service v Krok 2014 (3) SA
453 (GP)) in terms of the doubletax
agreement between the Republic of South Africa and Australia in respect of taxes that arose before the
amendments to the agreement took effect. Simply put, the court was called upon to rule on the retrospective effect of the said amendments.
In the course of the litigation the validity of the transfer of property situated in South Africa, but allegedly transferred under an agreement
concluded in the British Virgin Islands, also had to be considered. The supreme court of appeal did not explicitly recognize this as a conflict of
law or private international law problem and applied South African common law. The approach followed by the court will be critically evaluated.