Browsing by Author "Ger, Barry"

Now showing 1 - 2 of 2
  • No Thumbnail Available
    Item
    Open Access
    Should Kenya repeal its domestic limitation of benefits rule in favour of the simplified limitation of benefits rule in the MLI?
    (2025) Mulama, Doreen Muteyitsi; Hattingh, Johann; Ger, Barry
    The Limitation of Benefits (LoB) rule is a recommended measure to fight treaty abuse by the Organization for Economic Cooperation and Development (OECD). It works by preventing residents of third-party states from accessing treaty benefits between states where they do not have sufficient connection in the contracting state based on set criteria. The rule originates from US tax treaty practices and has since been embraced in domestic and treaty practice by other countries worldwide. Kenya is one of the countries that have a domestic LoB rule, which was enacted in 2014. In addition to the domestic LoB rule, Kenya has also elected to include in its treaty practice a version of the rule known as the simplified LoB (SLoB). This has been done under the auspices of the OECD's multilateral tax treaty (MLI). While the two rules operate in different legal realms, there are similarities and differences in their construction and application. Similary, there are different challenges and opportunities in applying each rule in its own legal realm. By analyzing the current law in Kenya, the study highlights the history of the rule and examines its utility for anti-abuse purposes in Kenya today. The SLoB, which is poised to be applied at the treaty level once Kenya ratifies the MLI, is also discussed in detail in contrast to the domestic law provision. The study finds that while the two rules can co-exist, there is a convincing case for why the domestic LOB rule should be repealed. This is because of the main challenge it poses in jurisdictions where it is use which is allowing domestic law to override treaty law. Its repeal will also be a step towards bringing the practice in this area on par with best practices, as reflected in the drafting and content of the treaty version of the rule espoused by the SLoB. The study concludes that for Kenya and other developing countries that have the rule in their domestic law, the MLI presents an opportunity to align with international best practices.
  • No Thumbnail Available
    Item
    Open Access
    Will implementing pillar two measures hinder the rehabilitation of South African Mines?
    (2025) Gouws, Janke; Futter, Alison; Ger, Barry
    South Africa imposes rehabilitation obligations on mining right holders to address the damage caused by mining operations. The National Environmental Management Act, 17 of 1998 (“NEMA”) requires each mining right holder to make financial provision to cover their rehabilitation costs in the future. A rehabilitation trust is one of the allowable financial vehicles listed under NEMA for purposes of financial provisioning. The mining right holder funds the rehabilitation trust through contributions that the trust invests in. Under section 37A, read with section 10(1)(cP) of the South African Income Tax Act, 1962 (“ITA”), the mining right holder can deduct these contributions for income tax purposes. The rehabilitation trust is also granted a tax exemption for all receipts accruing to it. In December 2024, the Global Minimum Tax Act, 46 of 2024 (“GMT Act”) was enacted in South Africa to implement Pillar Two measures in South Africa. Pillar Two imposes a global minimum tax of 15 per cent on multinational entities with revenue of EUR750 million or more to prevent large multinationals from shifting their profits to low-taxed jurisdictions. The Global Anti-Base Erosion (“GloBE”) rules and commentary guide the calculations to determine the effective tax rate and resulting top-up tax payable in terms thereof. This dissertation evaluates whether imposing Pillar Two measures in South Africa would render rehabilitation trusts ineffective and inefficient due to the ITA tax incentive that may result in a lower GloBE effective tax rate, ultimately forcing mining groups to pay a top-up tax for rehabilitation compliance. The main finding of this dissertation is that rehabilitation trusts, as members of a multinational group (“MNE”) with revenue of EUR 750 million or more, will have their financials included in the mining group's effective tax rate calculation regarding Pillar Two. The tax incentive provided in the ITA could affect the calculation by lowering the mining group's effective tax rate to below 15 per cent, resulting in the payment of top-up taxes. The concern is that mining groups will be deterred from using rehabilitation trusts, which would abandon them and complicate their regulation, as the other vehicles are not as regulated. The solution presented in this dissertation is to include rehabilitation trusts as an excluded entity for purposes of Pillar Two, as they operate similarly to governmental entities.