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Customs and Excise highlights Customs and Excise highlights Tax and Exchange Control Alert This week’s selected highlights in the Customs and Excise environment. PDF
When debt and creativity meet – a recent Tax Court decision When debt and creativity meet – a recent Tax Court decision Tax and Exchange Control Alert In the current tough economic times, it is common for companies to consider alternative funding arrangements to fund their activities, which minimise their cash flow obligations to third parties in the short term, while also ensuring that they comply with the relevant tax legislation and utilise it to their advantage. One option to consider in this regard, is the creation of a loan account by a debtor in favour of a creditor. In CLDC v The Commissioner for the South African Revenue Service (VAT1247) [2016] ZATC 6 (5 September 2016), handed down by the Tax Court on 5 September 2016, the court had to deal with this issue and specifically the consequences of s22(3) of the Value-Added Tax Act. No 89 of 1991 (VAT Act). PDF
Funding for small and medium-sized enterprises Funding for small and medium-sized enterprises Tax and Exchange Control Alert The Venture Capital Company (VCC) Tax Regime was introduced into the Income Tax Act 58 of 1962 (Act) to encourage investment into small and medium-sized enterprises (SMEs) and junior mining companies. Since its inception in 2008 and despite subsequent amendments in 2011, there has been limited take-up in the market, with only a handful of VCC funds having become fully funded and operational.
Paying additional margin on derivatives: The missing piece of the puzzle Paying additional margin on derivatives: The missing piece of the puzzle Finance and Banking Alert In July 2016, revised drafts of the subordinate legislation to the Financial Markets Act, 2012 (FMA) were released for comment. However, the second draft of the Margin Requirements for Non-Centrally Cleared OTC derivatives contracts (Margin Requirements) was not included. To date we have no indication as to when the Margin Requirements might be published. PDF
General moratorium on legal proceedings under attack General moratorium on legal proceedings under attack Dispute Resolution Alert It is now generally accepted that the Companies Act, No 71 of 2008 (Act) is an overhaul of our corporate law landscape. This shift is even more evident with the introduction of a new business rescue regime and along with it, the general moratorium on legal proceedings against a company in business rescue. PDF
Oh no! More employment regulation Oh no! More employment regulation Employment Alert Various entities, academics and commentators have stated that the employment arena is over regulated. Whether this is true is a debate for another day. PDF
Debt reduction and capitalisation – new ruling issued by SARS Debt reduction and capitalisation – new ruling issued by SARS Tax and Exchange Control Alert - 16 September 2016 The current stressed economic times often have a negative effect on the performance and sustainability of many businesses across a range of industries. As a result, many companies are forced to restructure their debt which often involves debt relief in various forms. From years of assessment commencing on or after 1 January 2013, the tax consequences flowing from debt reductions were amended PDF
When good intentions come back to bite: investment arbitrations in the energy sector When good intentions come back to bite: investment arbitrations in the energy sector Dispute Resolution Alert Foreign investors’ decisions to invest in the energy sector of a particular country are influenced by a country’s policies and regulations that promote the use of particular energy sources. Examples are renewable energy or other technologies that reduce the carbon footprint of fossil fuels, in line with climate change objectives. However, when developing such policies and regulations, governments must be mindful not to expose the country to unforeseen risk where the economics of developing such projects through incentives or subsidies may not be sustainable in the long run. PDF
Guidance from the UK for South African insurers regarding fraudulent claims Guidance from the UK for South African insurers regarding fraudulent claims Dispute Resolution Alert In our Alert of 16 November 2015 entitled Liars, cheats and thieves, we dealt with Hayward v Zurich Insurance Company PLC - a 2015 decision by the England and Wales Court of Appeal relating to insurance fraud. The 2015 decision has now been overturned on appeal by the UK Supreme Court. This appeal judgment sets an important precedent for the law relating to insurance fraud and will undoubtedly have an impact on the South African insurance industry. PDF
Validity of emoluments attachment orders the next exciting instalment Validity of emoluments attachment orders the next exciting instalment Dispute Resolution and Employment Alert The Constitutional Court has ruled that, with effect from 13 September 2016, no emoluments attachment order may be issued unless the court has authorised the issuing of such order after satisfying itself that it is just and equitable to do so and that the amount is appropriate. PDF
The scope of material adverse change and material adverse effect provisions in facility agreements The scope of material adverse change and material adverse effect provisions in facility agreements Finance and Banking Alert A facility agreement typically contains both a material adverse change (MAC) clause and a material adverse effect (MAE) clause, which entitle a lender to enforce repayment of a loan facility. PDF
Dismissing an employee without evidence of a breakdown of trust Dismissing an employee without evidence of a breakdown of trust Employment Alert Easi Access Rental (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration 8 BLLR 783 (LC). PDF
The International Arbitration Review - South Africa The International Arbitration Review - South Africa Director, Jonathan Ripley-Evans has contributed to the seventh edition of The International Arbitration Review and as a result, has been accredited with being on their Expert panel for 2016. PDF
BEPS involving interest in the banking and insurance sectors BEPS involving interest in the banking and insurance sectors Tax and Exchange Control Alert In October 2015, the OECD BEPS Action 4 Report on Limiting Base Erosion Involving Interest Deductions and Other Financial Payments (Report) was released setting out a common approach to address BEPS involving interest and payments economically equivalent to interest. The Report included a ‘fixed ratio rule’ which limits an entity’s net interest deductions to a set percentage of its tax earnings before interest, taxes, depreciation and amortisation (tax EBITDA) and a ‘group ratio rule’ which permits an entity to claim higher net interest deductions, based on the financial ratio of its worldwide group. PDF
Cars, taxable supplies and input VAT – what says the law? Cars, taxable supplies and input VAT – what says the law? Tax and Exchange Control Alert In our current day and age where convenience is key, it is common for businesses to deliver purchased goods to their clients. For such businesses, especially those who specialise in providing delivery and logistical services, it is important to note the applicable VAT considerations when purchasing a vehicle. In RTCC v Commissioner for the South African Revenue Service (VAT 1345) [2016] ZATC 5 (28 July 2016), the Tax Court had to determine whether input tax could be claimed by the taxpayer, a close corporation which carried on business in the courier industry, on the purchase of a vehicle that it used to make taxable supplies. PDF
Angola joins the international arbitration party Angola joins the international arbitration party Dispute Resolution Alert Angola, a country with a civil justice system regarded by many as being slow and out of date, has taken a positive step towards changing this perception by acceding to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. PDF
Directors, beware: Communication and transparency is the key Directors, beware: Communication and transparency is the key Dispute Resolution Alert The Constitutional Court’s judgment in Makate v Vodacom (Pty) Ltd [2016] ZACC 13, has been the subject of much debate. Presumably because it serves as a severe caution to directors in their dealings with third parties both internal and external to a company. PDF
Waste management charges on the horizon to tackle South Africa’s waste crisis Waste management charges on the horizon to tackle South Africa’s waste crisis Environmental Alert In studies conducted by the World Bank in 2012, South Africa was identified as the 15th largest generator of waste in the world. The latest National Waste Information Baseline Study conducted in 2011 recorded South Africa as having generated approximately 108 million tons of waste (with a resource value of R 25,2 billion) in that year alone. However, only 10% of that waste was recycled. PDF
Can a chairperson in a disciplinary appeal impose a more severe sanction? Can a chairperson in a disciplinary appeal impose a more severe sanction? Employers sometimes underestimate the importance of their disciplinary code and procedure as it is often regarded as a mere guideline. However, employers often miss out on the opportunity to prescribe important powers to chairpersons especially for internal appeals. This failure may later prove detrimental to the disciplinary process. PDF
Customs and Excise highlights Customs and Excise highlights Tax and Exchange Control - 2 September 2016 This week’s selected highlights in the Customs and Excise environment. PDF
Don’t be taken by surprise: Exchange control rulings and manual replaced Don’t be taken by surprise: Exchange control rulings and manual replaced Tax and Exchange Control Alert - 2 September 2016 On 29 July 2016, the Financial Services Department of the South African Reserve Bank (SARB), in reaction to the Minister of Finance’s announcements in the 2014 and 2016 Budget Speeches, released Exchange Control Circular No.7/2016 (Circular). PDF
The European Commission upsets the Apple cart The European Commission upsets the Apple cart Tax and Exchange Control Alert - 2 September 2016 On 30 August 2016, the European Commission (EC) issued a press release in which it announced that Ireland, a member of the European Union (EU), gave illegal tax benefits to certain companies in the Apple group worth up to €13 billion. The EC found that Ireland had contravened the “EU state aid rules because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid”. PDF
Challenges, opportunities and road ahead for International Arbitration in BRICS Challenges, opportunities and road ahead for International Arbitration in BRICS International Arbitration Alert On 27 August 2016, the Conference on International Arbitration in BRICS: Challenges, Opportunities and Road Ahead took place in New Delhi, India. The conference was initiated by the Indian government within the spirit of the theme of India’s chairmanship of BRICS to, amongst others, foster new co-operation mechanisms for the BRICS nations. The purpose of the conference was to discuss and debate the need to develop and establish an efficient and effective international arbitration mechanism for BRICS member states. PDF
Prescription – the mother of all evil Prescription – the mother of all evil Dispute Resolution Alert Prescription is one word which every creditor (and attorney) dreads. Prescription extinguishes a debt and there is very little a creditor can do once that proverbial ship has sailed. PDF
Clear-cut evidence in a not-so-clear-cut situation: when usually inadmissible hearsay evidence should be weighted as prima facie admissible evidence Clear-cut evidence in a not-so-clear-cut situation: when usually inadmissible hearsay evidence should be weighted as prima facie admissible evidence Employment Alert When approaching any form of legal proceedings, all parties have to regard and adequately consider what they will use to prove their version of events. In the case of labour disputes, an employer must advance evidence that will justify the dismissal of their employee, while the employee will present evidence to demonstrate that their dismissal was unfair. PDF
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