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South Africa Adds To Reportable Tax Arrangements

Thursday, March 19, 2015

On March 16, the South African Revenue Service (SARS) issued a final notice regarding the list of reportable arrangements under the Tax Administration Act (TAA), 2011.

The relevant section of the TAA provides that every company or trust which derives, or will derive, any tax benefit in terms of a reportable arrangement must report that arrangement to SARS within 60 days of the date that any amount is first received by any person under that arrangement. Reporting of an arrangement does not mean that SARS approves of it, but does enable the agency to evaluate the arrangement from an anti-avoidance point of view at an early stage of its implementation.

Until now, arrangements have been reportable if they have one of 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 (USD402,750).

Another category of reportable arrangements had been contemplated in the legislation. It was confirmed these would be set out in subsequent notices from SARS, focusing on arrangements that could have the effect of avoiding or postponing liability to, or reducing the amount of, taxes on income.

The final notice now issued by SARS includes a number of additional arrangements. These arrangements include those involving fees in excess of ZAR5m, which are, or may become, payable by a person who is a South African resident to a non-resident insurer; and those 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 exceeds, or can be expected to exceed, ZAR10m.

The new list also contains any arrangement in 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; and where controlling interest is acquired in a company that has carried forward, or expects to carry forward, a balance of assessed losses exceeding ZAR50m.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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