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Tax committee invites contributions

22nd November 2013

By: Callie Lombard

  

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In the August 9 instalment of this column, under the headline ‘Time to rewrite fundamentals of international taxation’, I wrote that the Organisation for Economic Cooperation and Development (OECD) had released its action plan on base erosion and profit shifting (BEPS).

The BEPS identifies 15 actions that the OECD believes will give governments domestic and international instruments to prevent multinational corporations from paying few or low taxes.

Prior to the article, on July 17, Finance Minister Pravin Gordhan had announced the names of members of a tax review committee, the Davis Tax Committee (DTC), whose establishment was first announced in the 2013 Budget speech. The DTC has been tasked with examining the role of South Africa’s tax system in promoting growth, job creation, sustainable development and fiscal self-reliance. It will take the long-term objectives of the National Development Plan into account in its work.

Using its terms of reference as the point of departure, the DTC has adopted a work programme that has prioritised the establishment of specialist subcommittees on small businesses, the appropriateness of the tax base and tax mix in South Africa, and base erosion and BEPS.

The DTC has also adopted an approach that is participatory and consultative. This will provide for wide engagement with all stakeholders. Special dialogue sessions will be arranged on an ongoing basis to take into account a diversity of interests and opinions.

The DTC has, accordingly, called on interested individuals to make use of the opportunity to contribute to these priorities. The top priority of the DTC currently is to address ways in which the tax system can be improved to facilitate entrepreneurship and the growth of small businesses. Various tax packages already exist to encourage the establishment of small businesses.

The DTC needs to review these packages to find an optimal tax package that assists small busi- nesses in contributing towards economic growth and reducing the high unemployment rate. The deadline for the submission of urgent contributions was November 20, while contributions regarding the tax burden and tax mix must be submitted by November 30.

The BEPS subcommittee is working on a longer timeframe that is aligned with the OECD BEPS Action Plan, and contributions must be submitted by January 31, 2014.

All contributions may be submitted by email to taxcom@sars.gov.za. More details on the work of the DTC and its terms of reference can be found at www.taxcom.org.za

Tariff Application – Correction Notice
On November 8, the International Trade Administration Commission of South Africa (Itac) published a correction notice relating to an earlier tariff application of August 23, to correct the omission of the word ‘windows’ and the inclusion of the phrase ‘of base metal’ under tariff subheadings 8302.30.30, 8302.41.10 and 8302.42.10. These are all South Africa-specific tariff subheadings.

Regarding tariff subheading 8302.30.30, the correction was effected by the deletion of ‘fittings of iron or steel or copper, commonly used in the manufacture of windows, doors and door frames (excluding window opening mechanisms), of base metal’ and the insertion of ‘fittings of iron, steel or copper (excluding window opening mechanisms) for windows, doors and door frames’.

As far as tariff subheading 8302.41.10 is concerned, the correction entails the deletion of “fittings of iron, steel or copper, commonly used in the manufacture of windows, doors and door frames” and the insertion of “fittings of iron, steel or copper, of a kind solely or princi- pally for windows, doors and door frames”.

With regard to tariff subheading 8302.42.10, the correction has been effected by the deletion of “fittings of iron, steel or copper, commonly used in the manufacture of doors and door frames” and the insertion of “fittings of iron, steel or copper, of a kind solely or principally for door and door frames”.

The application was lodged by the South African Revenue Service (Sars), whose reason for the application has also been amended from the earlier application. On importation, it is not possible to establish whether or not fittings that fall under these tariff subheadings will be used for factory installations on windows, doors, and/or door frames. The prerequisite of “commonly used in the manufacture” is therefore removed. The removal of “base metal” where it appears in 8302/30/30 has no impact as vehicles are predominantly made of base metal, but even if made of another material the subheading provision remains relevant to vehicles.

Comment is due by November 22.

Distillate Fuel – No Logbook
On November 6, Sars published the proposed insertion of Note 6(h)(v) in Part 3 of Schedule No 6 of the Customs and Excise Act to give a concession to users of distillate fuel for purchases where logbook records were not kept. The proposed amendment is to make retrospective allowance for partial diesel refunds to farming beneficiaries in the absence of logbooks to support refund claims for the period November 1, 2009, to March 31, 2013. The proposed amendment replaces the draft amendment to insert Note 5A that was circulated for comment by April 19.

Comment is due by November 26.

Customs Bills
On November 6, it was reported in the national media that the Parliamentary Standing Committee on Finance had decided to postpone its deliberations on two draft customs- related Bills to next year. Interested parties have until December 15 to make submissions to Sars.

Promotion and Protection of Investment Bill
In the Government Gazette of November 1, the Department of Trade and Industry extended an invitation for public comment on the Promotion and Protection of Investment Bill, 2013. The deadline for the submission of comments is February 1, 2014.

The Bill provides legislative protection for investors and is also aimed at promoting investment and achieving a balance of rights and obligations that apply to all investors.

The Bill consists of sections, namely Definitions, Interpretation of the Act, Purpose of the Act, Application of the Act, Protection of Investment, National Treatment, Security of Investment, Principles Relating to Expropriation, Transfer of Funds, Sovereign Right to Regulate Public Interest, Dispute Resolution, Anti-Avoidance, and Short Title and Commencement.

The Act is to be called the Promotion and Protection of Investment Act, 2013, and will come into operation on a date fixed by the President by proclamation in the Government Gazette.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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