10 January 2007
Pretoria - 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.
For more information contact:
Logan Wort
Cell: 083 447 0466
Issued by: South African Revenue Service
10 January 2007
