SARS Issues Revised List Of Reportable Tax Arrangements
Friday, February 5, 2016
On February 3, the South African Revenue Service (SARS) issued a Public Notice
providing a revised list of all reportable tax arrangements under the Tax Administration
Act, 2011 (TAA).
The TAA empowers SARS to identify arrangements that could have the effect of enabling the
avoidance or postponement of liability for taxes on income, or reducing that liability.
The relevant sections of the TAA provide that every company or trust that
derives, or will derive, any tax benefit in terms of a reportable arrangement
must report that arrangement to SARS within 60 days, so that the agency is able
to evaluate it from an anti-avoidance point of view at an early stage of its
For example, reportable arrangements originally foreseen in the TAA have three
characteristics: where the calculation of interest and other finance charges
in an arrangement is wholly or partly dependent on the tax treatment of that
arrangement; where provision has been made for the variation of such finance
charges should "the actual tax treatment differ from the anticipated tax
treatment;" and where the potential amount of the variation contemplated
in such a provision, referred to above, exceeds ZAR5m (USD315,240).
The Notice issued by SARS includes a number of other arrangements that have
been subsequently identified by the agency. For example, the list contains any
arrangement in the terms of which a company buys back shares from one or more
shareholders for an aggregate amount of at least ZAR10m, if that company has
issued or is to issue any shares within 12 months of entering into the arrangement.
Also included are arrangements in which a resident makes contributions or payments
to, or acquires a beneficial interest in, a trust that is not a resident, where
the amount of the contributions, payments or the value of the interest exceed
ZAR10m; and where a controlling interest is acquired in a company that has carried
forward, or expects to carry forward, a balance of assessed losses exceeding
In addition, an arrangement is reportable if a person that is a resident pays
an amount exceeding ZAR1m to an insurer under the law of any country other than
South Africa; or if the arrangement is expected to give rise, or has given rise,
to foreign tax credits, if those credits exceed an aggregate amount of ZAR10m.