Summary of the Davis Tax Committee’s BEPS Sub-committee General Report released December 2014
Introduction
This note provides a summary of the Davis Tax Committee’s (DTC) general report detailing the South African perspective of Base Erosion and Profit Shifting (BEPS).1 The Sub-committee’s interim report released during December 2014 is titled “Addressing Base Erosion and Profit Shifting in South Africa” and provides the DTC’s stance on BEPS as of the 30th of September 2014.2
The Davis Tax Committee and the Base Erosion and Profit Shifting Subcommittee
The South African Minister of Finance appointed the DTC to review South Africa’s taxation system in light of economic growth, employment, development and fiscal sustainability. The DTC subsequently established a sub-committee to address concerns regarding “base erosion and profit shifting” (BEPS). The DTC BEPS Sub-committee focuses on BEPS’s effects on the nation’s tax base as identified by the Organisation for Economic Co-operation and Development (OECD) and G20.3 The report is up to date with the OECD’s deliverables providing all 7 of the 15 deliverables in accordance with the OECD’s schedule.
Throughout the report, the DTC consistently refers to South Africa’s National Development Plan (NDP) and notes that while South Africa has a vested interest in combatting BEPS, South Africa should not adopt OECD measures without considering the country’s need to encourage foreign direct investment (FDI) in light of the NDP. The DTC also notes the general need to preserve South Africa’s international competitiveness by providing a tax environment conducive to economic growth.4
The DTC provides that protection against BEPS must occur at a policy level by “strengthening the source basis of taxation to effectively deal with inbound investments.”5It must ensure effective withholding taxes, account for the impact of treaties, consider the impact of exchange controls, and consider the Finance Ministry’s intended phase-out of exchange controls. At an administrative level, the use of proper forms and withholding processes must be considered as well as the impact of treaties on the exchange of information.6
To what extent is BEPS a problem in South Africa?
Although it is difficult to quantify the occurrence of BEPS in South Africa, the DTC writes that since the country rejoined the global economy in 1994, there is increased global interest in South Africa. Naturally, South Africans are more actively participating in offshore investments and minimizing global tax exposure.7
The National Development Plan (NDP) is South Africa’s fiscal and economic strategy and supports a competitive tax policy that fosters economic growth, an increase in tax revenues, and an increase in the tax base. Given the many times the NDP is referenced throughout the report, the NDP framework will clearly guide the DTC’s practical response to BEPS.
The Sub-committee looked to the South African Revenue Service (SARS) statistics indicating that corporate revenues were fairly stable until 2008 and took a predictable down turn after the 2008 financial crisis. However, despite increased economic activity in certain sectors, the corporate tax contribution to the GDP declined between 2008 and 2013.8 The DTC writes that is does not believe that the declining trend in the ratio of corporate income tax to GDP is necessarily from the existence or non-existence of BEPS practices.
Second, the Sub-committee reviewed the National Treasury’s 2013 Budget, which concluded in line with the SARS’ statistics above. The National Treasury’s report showed that corporate tax revenue in South Africa declined from 7.2{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of GDP in 2008/9 to 5.5{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} in 2009/10 and to 4.9{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} in 2010/11. In 2011/12, the ratio slightly recovered to 5.1{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} but then decreased again to 4.9{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} in 2012/2013.9
Third, the Sub-committee referenced the South Africa Reserve Bank (SARB), which records payments directed offshore. The DTC references SARB data that measures non-goods payments from 2008 to 2011 inclusive. Non-goods payments include copyright, royalty and patent fees; legal, accounting and management consulting fees; advertising and market research; research and development; architectural, engineering and technical services; and agricultural, mining and other processing services. Approximately 50{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of all payments flowing out of South Africa relate to legal, accounting and management consulting services.10
Interestingly, just after the 2008 financial crisis, overall outflows increased by nearly 25{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e}.11Although the South African economy did not feel the full effect of the financial crisis, the DTC finds it peculiar that legal, accounting and management consulting services increased by nearly R6.5bn (an increase of 32.6{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e}). Engineering and technical services increased by R3.7bn (an increase of 39.5{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e}).12
Besides citing the above studies, the DTC does not provide a quantifiable or definitive indication of the prevalence of BEPS in South Africa.
State-owned multinational corporations
Lastly, the Sub-committee looked to state-owned or controlled enterprises, which the DTC identified as significant “players in cross border trade as well as posing potential transfer pricing risk.”13 The DTC showed great interest in state enterprises because state-owned enterprises appear to consume a notable portion of South African non-goods services.
In 2011, the United Nations Conference on Trade and Development (UNCTAD) reported that there are at least 650 state-owned multinationals globally, constituting an important emerging source of foreign direct investment (FDI). Further, the DTC notes that there are more than 8,500 state enterprise foreign affiliates globally, bringing foreign affiliates in contact with several host economies.
The DTC also notes that although state-owned multinationals comprise of less than 1{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of all multinationals, their FDI totals about 11{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of total FDI globally.14 Consequently, the DTC BEPS Sub-committee considers state-owned multinationals a significant force in non-goods transactional flows. It surmises that state-owned enterprises consume non-goods in a unique way relative to general consumption trends. The DTC cites that state-owned multinationals spend nearly 50{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of total payments on legal, accounting and management consulting services. The second largest type of state-operated enterprise purchases is copyright, royalty, and patent fees and architectural, engineering, and technical services. Lastly, the DTC notes that State-owned enterprises are the largest consumers of engineering and technical services at 44{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} of the total data set.15
The DTC Sub-committee also assessed the top non-goods payments in taxpayer sectors; unsurprisingly, the prevalence of payments come from the manufacturing and mining sectors. The DTC views the magnitude of non-goods transactions as a serious threat to the fiscus. It is an indication that illicit tax base migration through avoidance schemes and practices could be taking place.16 “[C]onstant reviews in respect of assurance interventions and tracking should become the norm.”17 The DTC also notes that, “in respect to consuming services from abroad, a permanent establishment (PE) risk exists for the offshore service providers.”18
Uncompetitive markets and slowed corporate tax base growth
Both the DTC and the National Planning Commission (NPC) claim that uncompetitive goods and service markets in South Africa are a result of apartheid sanctions leading to economic isolation.19 Uncompetitive markets resulted in high profit margins for existing enterprises but little investment or innovation. The NPC and commentators claim that this had a negative impact on growth in the manufacturing industry and in employment creation. Consequently, the DTC concludes that apartheid-induced uncompetitive markets constrained the corporate tax base’s growth.20
Measuring South Africa’s tax gap
The DTC briefly acknowledged the United Kingdom’s approach to measuring its tax gap in 2013.
Protecting the tax base while ensuring economic competitiveness
Revenue from FDI is a source of development, modernisation, income growth and employment.21 Two common methods of encouraging FDI are tax incentives and tax holidays. South Africa has rarely offered tax holidays; the nation prefers tax incentives in the form of tax credits.22 Certain types of incentives provide more opportunities for tax planning than others and recommends the best practice guidelines in tax incentives, which require that governments ensure:
- transparency in tax incentives;
- publication of available tax incentives, how they are applied, and the terms of their availability;
- a clear methodology to measuring the cost of the incentives targeted by both domestic and international investment, and that the methodology is published regularly facilitating international comparisons; and
- the effectiveness of incentive measures is publicised.23
Again, the DTC urges that any measures to counter BEPS must preserve South Africa’s international corporate tax competitiveness.24
Dangers in unilateral action to combat BEPS
The Committee urges that unilateral action poses risks to South Africa. The country should not pre-empt or unilaterally respond to the OECD’s BEPS plan until OECD member states have reached consensus on BEPS measures and clear guidance is issued. The unilateral introduction of domestic legislation prior to multilateral, global reform would likely result in a less investor friendly tax environment and could place South Africa at a disadvantage in attracting foreign direct investment. “South Africa cannot afford to proceed too hastily with the OECD Action Plan while other countries are taking a ‘wait and see’ approach, relaxing their laws to attract investment and changing their policies to remain competitive.”25
The DTC also notes that South Africa faces tax competition from other African countries and special consideration must be given to key industries. Mining and manufacturing are mentioned, which are largely reliant on foreign funding for expansion. The DTC stresses that measures countering BEPS may undermine the NDP’s objective to increase private sector investment in labour intensive areas and stimulate diverse development.26
The DTC provides three examples of a global trend towards competitive tax setting. Brazil, Russia, India, China and all G7 economies, with the exception of the US, lowered their corporate tax rates since 2000.27 Second, the DTC cites the general departure from worldwide taxation systems to territorial systems. For example, the United Kingdom and Japan switched from worldwide to territorial systems in 2009. Third, European countries are moving toward shareholder relief systems taxing dividends at a lower rate at the personal level and away from imputation systems.28
A competitive tax policy
To develop a competitive tax policy that acknowledges BEPS risks, the DTC suggests that South Africa’s legislators acknowledge the nation’s place as an emerging African economy and consider industries dependent on foreign funding for expansion. “South Africa cannot afford to proceed too hastily with the OECD Action Plan while other countries are taking a “wait and see” approach, relaxing their laws to attract investment and changing their policies to remain competitive.”29
Adhering to the principles of a good tax system
The DTC report discusses the principles of a good taxation system in great detail. These principles are: equity, efficiency, certainty and simplicity.30
The role of good tax administration in protecting the tax base and ensuring a competitive economy
The DTC recommends South Africa endorse the OECD’s “Enhanced Relationship” principle, which focuses on finding a balance between service and enforcement to achieve voluntary compliance. Countries with this relationship are presumed more attractive to MNEs.31 To achieve this, the DTC recommends SARS build its administrative capacity by recruiting and maintaining quality staff.32 The DTC argues that the current “incentivize system,” whereby gross “tax collections are treated as a major indicator of good performance, should be stopped because there is a perception that it fosters corruption and system abuse.33
Exchange controls
Largely unique to South Africa is the country’s exchange control rules which the DTC discusses in some detail.34
“Exchange controls ensure the timeous repatriation into the South African banking system of certain foreign currency acquired by residents of South Africa, whether through transactions of a current or of a capital nature; and they also prevent the loss of foreign currency resources through the transfer abroad of real or financial assets held in South Africa.35 The Regulations prohibit any foreign exchange transaction unless a specific exemption for such a transaction has been granted by the Treasury or by a person authorised by the Treasury.”36
The Financial Surveillance Department (FinSurv) of the SARB grants specific permission. If specific permission is not contained in the Exchange Control Rulings (Rulings), then transactions are authorised by Authorised Dealers in foreign exchange (ADs) and/or Authorised Dealers in foreign exchange with Limited Authority (ADLAs) in accordance with the Rulings.
The role of exchange controls in curtailing BEPS
Generally, exchange controls are based on the premise that all transactions must take place at a fair, market related price on an arm’s-length basis. The concept of a fair market price presents difficulty when the transactions at issue occur over the counter meaning the goods or assets are not listed on a formal exchange. The DTC notes that it is also difficult to determine if a transaction itself is arm’s length. This results in reliance on the resident taxpayer to confirm the transaction’s nature.37
While the DTC notes that the Exchange Control Regulations do not have specific provisions to curtail BEPS, South African exchange controls implicitly play a defensive role against BEPS. This is especially prevalent in e-commerce, digital products, virtual currencies, intellectual property, royalty payments and other forms of intangible related transfer functions. In this regard, exchange controls complement existing legislation that deters harmful tax practices by preventing capital outflow that could reduce the tax base.38
How exchange controls have been applied to counter various BEPS schemes
The DTC details several examples of how exchange controls currently counter some BEPS schemes. Examples summarized in the report include foreign loans, imports, loop structures, and individual remittances via ADLAs.39
- Foreign Loans: All incoming foreign loans in South Africa are subject to thin capitalization rules. Consequently, interest is capped at prime +2{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} for related party loans and at prime +3{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} for third party funding. South African loan policy prevents South African entities with offshore subsidiaries from re-establishing entities back in South Africa. The DTC reports that this policy prevents South African entities from moving its tax base to a foreign jurisdiction.40
- Imports: All import transactions must be substantiated by documentary evidence verifying that the goods were cleared through Customs. Misrepresentation in invoicing or under-invoicing of goods at Customs exacerbates the effects of transfer pricing and other BEPS schemes. The DTC cites a UNCTAD report, which found that illicit, incorrectly invoiced capital flows through developing countries costs billions in revenue by disguising foreign investment and avoiding capital controls.41 UNCTAD calls this “channel financing” and suggests capital management measures like capital controls.
SARB investigations indicate under-invoicing occurs to circumvent import duties via fraudulent documentation presented to Authorised Dealers. To curb the submission of false documentation, FinSurv introduced the Imports Verification System (IVS), which allows the AD to verify the authenticity of a SARS Customs Release by validating a unique Movement Reference Number (MRN), which is annotated on the customs release. However, the current system does not validate the document in terms of the indicated Customs Value.42
- Loop Structures: Loop structures are tax-avoidance schemes where a South African resident invests in an offshore trust and the trust reinvests funds in South African businesses in which the original investors hold a stake.43 Loop structures breach exchange control regulations, which prohibit South African residents from holding their local assets in offshore structures or from placing their foreign assets at the disposal of another South African resident.44 The DTC does not specify how exchange controls currently combat loop structures.
- Individual Remittances via ADLAs: SARB’s investigations into foreign nationals who remit South African earned employment funds abroad through ADLAs revealed exchange control contraventions. Many of the transactions were funded by cash deposits into the ADLAs’ client accounts. This raises concern that money laundering and tax evasion is occurring.45
The DTC lastly noted that FinSurv monitors cross-border flows and consistently shares information with SARS and the Treasury. The Treasury introduced policies to encourage South African individuals and corporate and institutional investors to use South Africa as a base for diversifying through domestic channels. One example of this is the Holdco regime (Treasury Management Company), which brings flows back into South Africa from offshore entities that would have previously been transferred to tax havens such as Mauritius, Isle of Man, or other jurisdictions.46
How the SARB works with other government agencies to monitor financial and capital flows
FinSurv and the Tax Policy Unit work closely at the Treasury when it receives requests for corporate restructures.47 FinSurv also receives reports containing financial statements from offshore entities of various South African corporations. FinSurv is monitoring capital and financial flows in and out of South Africa and is therefore better able to report different forms of cross-border information to Treasury. However, while FinSurv monitors cross-border activity, it is unable to identify if a transaction has a BEPS-specific component.
Recommendations on how SARB can assist in curtailing BEPS
The DTC recommends that Tax Clearance Certificates become compulsory for high risk transactions involving individuals (eg. gifts above a certain threshold); a general provision is added to Regulations that will void transactions with the purpose of BEPS from the outset; rule circumvention is prevented through pro-active collaboration between SARS and FinSurv; and the BEPS schemes (eg. hybrids, foreign tax generalization etc.) are disclosed to FinSurv to assist detection when approving requests.48
Existing measures in place to curtail BEPS in South Africa
Although existing legislation does not expressly reference BEPS per sē, South African policies against BEPS include:
- residence basis of taxation, which the DTC opines has been “instrumental in curtailing erosion of the tax base, especially in light of South Africa’s re-entry into the global economy . . .;”49
- specific anti-avoidance provisions including controlled foreign company (CFC) rules,50 transfer pricing thin capitalization rules,51 rules regarding hybrid instruments, reportable arrangements rules,52 and the Voluntary Disclosure Programme;53
- general anti-avoidance rules and the substance over form principles;54
- tax treaties containing anti-treaty abuse provisions (e.g. the beneficial ownership provision) to curtail abuse by third country residents; and
- exchange Control rules, as previously discussed.55
The DTC suggests that South Africa’s existing legislated taxation policies countering BEPS is progressive. “[I]n many respects, South Africa has done better than many developed economies.”56
Conclusion
Although the DTC comments on the strength of existing anti-BEPS policies and questions if further anti-BEPS action is needed, the report’s annexure lists detailed proposed changes. The DTC recommends changes in all 7 of the action plan deliverables released by the OECD to date. Changes include addressing the digital economy, neutralising hybrid mismatch arrangements, countering harmful tax practices, preventing treaty abuse, re-examining transfer pricing work on intangibles, documentation and country-by-country reporting, and developing a multilateral instrument to enable implementation.57 However, the DTC proposes more aggressive recommendations in some deliverables than others.
In conclusion, the DTC reiterates caution in acting unilaterally as “this may result in double taxation, which could risk making South Africa unattractive as a destination for foreign direct investment.”58
1See also the Annexure titled, “The Summary of Recommendation for South Africa: OECD September 2014 Deliverables.”
2“Addressing Base Erosion and Profit Shifting in South Africa: Davis Tax Committee Interim Report”
3This summary does not address the OECD’s 15 point action plan in detail. For more information on the BEPS Action Plan, see OECD “Action Plan on Base Erosion and Profit Shifting” (accessed 13-01-2015)
4Davis Tax Subcommittee Report on BEPS (page 25).
5Addressing Base Erosion and Profit Shifting in South Africa: Davis Tax Committee Interim Report. Page 38.
6The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 28 (23-12-2014)
7The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 19 (23-12-2014)
8The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Table 1 Page 20. (23-12-2014)
9The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 20 (23-12-2014) citing the National Treasury Budget (2014).
10The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Table 2 Page 21. (23-12-2014)
11The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Table 1 Page 21 28. (23-12-2014)
12The DTC is cognizant of the positive economic effects of the 2010 World Cup but writes that it is unlikely that the quantum of these monetary flows are explained by a single event. See The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 21. (23-12-2014)
13Transfer pricing documentation, reporting and intangibles are acknowledged in the Report’s Annexure. See Actions 8 and 13. The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 22. (23-12-2014)
14Roughly 11{780f53c297e2c008074d23b865a0ce0b35a4f08852d8e1e49466a5a902c4e44e} during the year 2010. The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 22. (23-12-2014)
15The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 23. (23-12-2014)
16The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 24. (23-12-2014)
17The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 24. (23-12-2014)
18The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 24. (23-12-2014)
19The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 24. (23-12-2014) citing National Planning Commission National Development Plan 2030 (2012).
20The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 25. (23-12-2014)
21The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 26 (23-12-2014) citing OECD “Foreign Direct Investment for Development: Maximizing Benefits Minimising Costs (2002) at 3.4.
22The DTC cites IMF, World Bank and OECD studies indicating tax holidays are less effective at generating new investment than tax credit incentives. See The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 26. (23-12-2014)
23The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Footnote 77 Page 27 (23-12-2014) citing J Owens “What is meant by a Competitive Tax Environment?” Presentation before the Davis Tax Committee (19- 09-2013).
24The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 25 (23-12-2014) citing J Owens “What is meant by a Competitive Tax Environment?” Presentation before Davis Tax Committee (19-09-2013).
25The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 28 (23-12-2014)
26The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 28 (23-12-2014)
27The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 27 (23-12-2014) citing J Owens and C Sanger “Global Trends in Taxation” Presentation to the Davis Tax Committee (19-09-2013) at 2.
28In many countries dividends are taxed at lower rates than personal income tax rates imposed on wage. See The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 27 (23-12-2014) citing J Owens and C Sanger “Global Trends in Taxation” Presentation to the Davis Tax Committee (19-09-2013) at 2.
29The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 28 (23-12-2014)
30The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 28 (23-12-2014) citing RM Sommerfeld, SA Madeo, KE Anderson & BR Jackson Concepts of Taxation (1993) at 10; WA Raabe & JE Parker Taxation Concepts for Decision Making (1985) at 14.
31The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 31 (23-12-2014) citing J Owens “What is meant by a Competitive Tax Environment?” Presentation before the Davis Tax Committee (19-09-2013).
32The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 31 (23-12-2014) citing J Owens “What is meant by a Competitive Tax Environment?” Presentation before the Davis Tax Committee (19-09-2013).
33The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 31 (23-12-2014) citing the Ministry of Corporate Affairs Department in India “Report of the Committee for Reforming the Regulatory Environment for Doing Business in India” (09-2013).
34Exchange controls intend to protect South Africa’s foreign exchange reserves. During the apartheid, exchange controls on residents were tightened in response of large-scale capital outflows. Strict exchange controls applied to prevent the flow of funds from South Africa. However, since 1997 the exchange controls have been generally relaxed, and the National Treasury intends to continue deregulation of exchange controls. The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 32 (23-12-2014)
35The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 32 (23-12-2014) citing South African Reserve Bank ‘Exchange Control Manual’ para E.
36The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 32 (23-12-2014)
37The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 32 (23-12-2014)
38The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 28 (23-12-2014) citing AW Oguttu “Curbing Offshore Tax Avoidance: The Case of South African Companies and Trusts” (2007) UNISA LLD Thesis at 431.
39See The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Pages 33-35 (23-12-2014).
40The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 33 (23-12-2014)
41The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 33 (23-12-2014) citing UNCTAT “Trade and Development: Global Governance and Policy Space for Development” (2014).
42The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 34 (23-12-2014)
43The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 34 (23-12-2014) citing L du Preez “No Sign of Extension to Amnesty Yet” (8-11-2003). (Accessed on 15-01-2015.)
44Exchange Control re 10(1)(c); Exchange Control Circulars D417 and D405. For details, see generally AW Oguttu “Curbing Offshore Tax Avoidance: The Case of South African Companies and Trusts” (2007, UNISA LLD Thesis) chapter 9.
45The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 25 (23-12-2014).
46The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 35 (23-12-2014)
47The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 36 (23-12-2014)
48The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 36 (23-12-2014)
49The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 37 (23-12-2014)
50Section 9D of the Income Tax Act 58 of 1962 as amended.
51Section 31 of the Income Tax Act 58 of 1962 as amended.
52Sections 34-39 of the Tax Administration Act 28 of 2011.
53Sections 225-233 of the Tax Administration Act 28 of 2011.
54However, these provisions generally only apply in the domestic arena.
55See footnote 34 and Regulation 1D of the exchange control regulations.
56The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 36 (23-12-2014)
57See Annex titled “Summary of Recommendations for South Africa: OECD September 2014 Deliverables” following the DTC’s Interim Report.
58The Davis Tax Committee “Interim Report: Addressing Base Erosion and Profit Shifting in South Africa.” Page 38 (23-12-2014)
