OpenUCT :: Browsing by Author "Gutuza, Tracy"

Browsing by Author "Gutuza, Tracy"

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Open Access
A critical tax theory approach to income tax relief for black-middle class taxpayers contributing to the support of family
(2022) Ndebele, Zandile; Gutuza, Tracy; Moore Elena
The purpose of this thesis is to examine income tax relief measures for taxpayers with dependants in South Africa. This research has found that taxpayers who are black and middle-class are likely to make contributions to the support of household member and non-household member dependants. This is also supported by literature from the United States, where black middle-class individuals are found to make significant contributions towards the support of their kin when compared to other races. This support which a black middle-class taxpayer gives to their dependants entwines with their ability-to-pay in tax law. A taxpayer's ability-to-pay is reduced by the contributions made to their dependants. For this reason, it is relevant to examine the intersectionality of race, class, and family circumstances with tax law. The black middle-class are an interesting demographic in South Africa and are referred to as a “precariat class” because of the uncertainty and insecurity linked to this class. In 2021, the black middle-class carry a burden to contribute towards the support of dependants. This burden was imposed on them first by apartheid policies which excluded black South Africans from receiving social welfare assistance and then by racial and economic inequalities in post-apartheid South Africa. Through discussions on social justice and tax equity, the thesis finds a basis for income tax relief measures for taxpayers with dependants in South Africa. The introduction of such a tax system would allow the black middleclass taxpayers to take advantage of the income tax benefits. The definition of family and the definition of a dependant in allowing for the income tax benefits will be important. These definitions should reflect the meaning of family as understood by South African taxpayers. That way, the disparate impact, and unintended consequences of the income tax benefits on those that use these benefits are avoided to an extent.
Open Access
An analysis and critique of secured lending in South African law, including cession in securitatem debiti as a means to secure the repayment of loans for consumption
(2022) Kariem, Adnaan; Gutuza, Tracy; Hutchison, Dale
The thesis critiques South African secured lending laws by examining the contractual basis on which money is loaned and its repayment is secured, focusing on syndicated loans. The loan of money constitutes a loan for consumption in terms whereof the lender passes legal title to its money to the borrower, who must return the same number of units in the same currency, with or without interest. The law on loans for consumption is based on Roman law and Roman-Dutch law. The thesis analyses the principles whereby senior and mezzanine lenders, acting in a syndicate, lend money to a borrower in a loan for consumption where the repayments and security rights are ranked. The internationalisation of standard-form loan agreements is discussed, and some English law lessons are analysed. The principles that govern the legal nature, purpose and function of security rights in rem and in personam, and specifically security rights in syndicated loans, are analysed. In law, a security right is created when an asset is appropriated to a debt as contemplated by the common law and the Insolvency Act 24 of 1936. Security rights must be accessory to a valid principal debt. Insolvency law treats cessionaries as secured creditors and holders of guarantees as concurrent creditors. The principles of the law of cession, and the pledge and cession in securitatem debiti of rights in personam, including the theories that underly it, namely, the pactum fiduciae theory and the pledge theory, found security in personal rights and are measured against the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Secured Transactions, Vienna, 2019, the English law on charges and Article 9 of the American Uniform Commercial Code. A number of deficiencies and inconsistencies in our security rights laws are identified, including incongruency, the absence of a coherent and uniform security rights system, and adverse insolvency law consequences for the cedent on the cessionary's insolvency arise from applying the pactum fiduciae theory. I conclude that the time is opportune to codify and reform South African law on secured lending to remedy the identified deficiencies and inconsistencies.
Open Access
An analysis of the effect of the amendments to the taxation of foreign non-South African employment income
(2019) Naidoo, Linton; Gutuza, Tracy
When South Africa moved from a source based to a residence based system of taxation on 1 March 2001, all South African residents were now being subject to tax on their world-wide income. Residents working outside the Republic were then at risk of being taxed twice on the employment income derived because of South Africa’s residence basis system of taxation. The section 10(1)(o)(ii) of the Income tax Act No. 58 of 1962 (“IT Act”) exemption was the relief mechanism for residents to prevent the possibility of double taxation on the employment income derived from working outside the Republic. As from the 1st of March 2020, Parliament has amended section 10(1)(o)(ii) of the IT Act. The section is amended so that foreign employment income should not be fully exempt in the hands of a resident. Section 10(1)(o)(ii) of the IT Act currently exempts in full, the foreign employment income derived by a resident subject to certain requirements as per the section. The amendment seeks to exempt the first one million rand (R1m) of a residents’ employment income earned outside of the Republic. Foreign employment income in excess of R1m will be taxed in the Republic, applying the normal tax tables for that particular year of assessment. All other requirements of section 10(1)(o)(ii) will not be affected by the amendment, therefore residents will still be required to fulfil the other requirements of the section such as to spend more than 183 and at least 60 continuous full days outside of the Republic rendering employment services during any 12-month period in order to qualify for the exemption. The primary reason for the amendment of section 10(1)(o)(ii) is to prevent situations where employment income is neither taxed in the foreign country nor in South Africa, i.e. double non-taxation, or where foreign taxes are imposed at a significantly reduced rate on employment income derived from working outside the Republic. The amendment of section 10(1)(o)(ii) exemption will negatively affect a resident earning in excess of R1m and working in a tax free or low tax jurisdiction. There are a few alternatives available to affected residents working outside the Republic such as: 1. Seek relief via section 6quat of the IT Act, which is a tax credit on foreign taxes paid. 2. Apply the relevant Articles of a Double Taxation Agreement (“DTA”) between South Africa and a source country in order to seek relief for juridical double taxation. 3. Immigrate and become a non-resident, which will trigger a deemed disposal for capital gains tax purposes in terms of section 9H(2) of the IT Act.
Open Access
An analysis of the possible fiscal consequences of a controlled foreign company being declared resident in South Africa– may SARS have its cake and eat it?
(2020) Kotze, Salmon Ruan; Gutuza, Tracy
The issue considered in this paper proceeds from the basis of a hypothetical income tax assessment issued by SARS against a hypothetical taxpayer. The circumstances under which the hypothetical assessment is raised are as follows: suppose that Company A, a South African resident, owns 100% of the participation rights in Company B (the hypothetical taxpayer), a resident of Luxembourg. Company A has failed to qualify for any of the internal “exemptions”1 contained in section 9D of the Income Tax Act, 58 of 1962 (“the Act”), and has thus been taxed with reference to the profits of Company B for the past ten years. In the eleventh year, SARS audits Company B and determines that its effective place of management has, in fact, been in South Africa all along and that it is therefore resident in South Africa in terms of paragraph (b) of the definition of “resident” contained in section 1 of the Act. Upon the determination that Company B is resident in South Africa, SARS proceeds to raise assessments against Company B in relation to the taxable income it earned during its current and former years of assessment (i.e. income tax assessments are raised for the full 11-year audit period) (referred to herein below as the “hypothetical assessment”). The purpose of this paper is thus to investigate the fiscal consequences that do (and, it will be argued, do not) arise subsequent to a controlled foreign company (“CFC”) having been declared resident of the Republic of South Africa, in circumstances where a South African resident taxpayer had historically been taxed with reference to the profits of that CFC in terms of section 9D. It is clear from the example that the same income now being taxed in the hands of Company B subsequent to its South African residency would already have been taxed in the hands of Company A by application of section 9D. The inequity of this result is undeniable. Should assessments be raised against Company B in the manner suggested it would amount to economic double taxation.
Open Access
An analysis on taxation of South African residents who are employed and working outside the territorial borders of South Africa
(2022) Salie, Mogamat Shakir; Gutuza, Tracy
I am an Operational Specialist in the learning and development department at my company and I am often faced with questions on the tax treatment of employed individuals working abroad. It is for this reason that I have chosen to dedicate my research in this area. South African tax legislation on the exemption of foreign employment income has been amended with effect from 1 March 2020. These amendments affect the taxation of South African tax residents who are employed and working outside the territorial waters of South Africa. Furthermore, these amendments do not consider the exemption of non-employment foreign income. This analysis has only considered employed individuals who are tax resident in South Africa and who have not formally emigrated from South Africa. The aim of this analysis is focused on the equitable and neutral tax treatment between employment income and income earned from other services rendered following the amendments. I have centred my analysis around equity and neutrality by comparing the different tax treatment of employment income and other forms of income. This analysis seeks to answer whether the amendments to the tax legislation support equity and neutrality. The key findings from this analysis have given me a better understanding of the rules and regulations around the amendments. I am now able to offer sound advice to my clients who in turn will make more informed decisions when planning their international employment assignments. In addition to the above, I hope that my analysis below will contribute towards any future research that may be done in this area.
Open Access
An analysis of the methods used in the South African domestic legislation and in double taxation treaties entered into by South Africa for the elimination of international double taxation
(2013) Gutuza, Tracy; Jooste, Richard; Horak, Wally
This thesis adds to the body of literature exploring the policy principles of equity and neutrality, as applied in the context of methods relieving international double taxation and in the context of a recently opened and developing economy.
Open Access
An analysis of the proposed annual mark-to-market taxation of the capital gains of long-term insurance policyholders
(2013) Johnson, Niel; Titus, Afton; Gutuza, Tracy
This dissertation explores National Treasury's mark-to-market proposal which aims to tax the unrealised capital gains of long-term insurance policyholders on an annual basis. Although the proposal was ultimately rejected it remains under consideration. The mark-to-market proposal is evaluated against its intended purpose. The intended purpose is understood to be the collection by the South African Revenue Service (SARS) of capital gains tax (CGT) which has been 'effectively withheld' from policyholders by the insurer. Having gained an understanding of the mark-to-market proposal and its intended purpose, the proposal will be measured against the following criteria: Does it succeed in recovering capital gains taxes which have been 'effectively withheld' from policyholders? What are the side-effects of the proposal, if any?
Open Access
Comparison of South Africa's automotive investment scheme to similar trade, export and investment financial assistance regimes (incentives) of Nigeria and Kenya
(2015) Cser, Melinda; Gutuza, Tracy
Comparison of South Africa 's Automotive Investment Scheme to similar trade, export and investment financial assistance (incentives) regimes of Nigeria and Kenya The AIS is a South African government investment incentive offered within South Africa's Automotive Production and Development Program. The intention of the AIS is to grow and develop the automotive sector through investment in the production of new and/or replacement models and components. The overall aim of the research is to analyse whether the manner in which the AIS incentives seek to achieve the above objectives , and the objectives themselves are aligned and furthermore to indicate the potential weakness of the AIS . The analysis of the weaknesses focuses in particular on potential inconsistencies amongst the provisions of the AIS or amongst the provisions of the AIS and the provisions of its sub - components. Furthermore, the research will review whether the economic benefit criteria of the AIS to be fulfilled by applicants are sufficiently detailed or the lack of details creates uncertainty with the interpretation and implementation. Lastly, the paper will review the transparency elements of the AIS. To obtain an answer to this question, the AIS will be analysed and will be compared against the policies and/or legislation of Nigeria and Kenya, where applicable, to determine whether the policies of these two countries could inform the AIS in achieving its objectives. The analysis will be executed in six chapters. The first chapter is an introduction. Chapter two will cover the policy reasons for the introduction of automotive (and manufacturing related) policies in South Africa, Nigeria and Kenya. Chapter three will provide an overview of the policies and, where applicable, the relevant legislation in the three countries that deal with the automotive industries. As the policies of the three countries are very differently construed , the intention of this paper is not to undertake a full and comprehensive overview of all the relevant South African legislation dealing with tax, customs duties or investment protection to investors in the automotive sector because such legislation is currently one of the key pillars of the Nigerian and Kenyan policies . Therefore, the focus will be on comparing the structure, objectives and operation of the policies of Nigeria and Kenya where it is comparable with the AIS or the APDP. The fourth chapter will deal with the investment specific incentives and benefits provided in the three countries , in particular in relation to cash grants and t heir availability (or not) for investors in Nigeria and Kenya. In relation to Nigeria and Kenya the legislation and policies having similar objectives or structure will be discussed. For South Africa the achievements of the AIS will also be analysed briefly to understand how it has performed against its objectives up until 2015. Chapter five will discuss the institutions and government agencies which are authorized and responsible for handling funding applications, for negotiating funding/investment agreements , and approving and monitoring investment projects related to the automotive industry. The final chapter shall conclude on the findings, and highlight the potential weaknesses of the AIS by providing proposals for improvement based on the lessons learnt from Kenya and/or Nigeria, where or if possible.
Open Access
A discussion on countering offshore avoidance through the use of trusts: a South African perspective
(2014) Karriem, Zulpha; Gutuza, Tracy
Since the very existence of tax havens propel offshore avoidance through trusts, the topic of tax havens will be discussed and since offshore avoidance is dealt with on an international scale, this work will also consider some of the international initiatives taken to minimize the issue as well as consider the effectiveness of those initiatives. Thereafter, this paper will consider the anatomy or unique features of an offshore trust as a preferred vehicle used in tax avoidance. In considering these, I will look at the establishment of trusts in offshore jurisdictions. I will also consider the new Generally Accepted Avoidance Rule (GAAR) and some of the anti-avoidance measures put in place to curb the use of trusts established in offshore jurisdictions for tax avoidance from a South African perspective. To this end, I will consider whether the South African measures put in place addresses the problem of tax avoidance through the use of offshore trusts. Lastly, this paper will discuss some of the findings on the topic.
Open Access
Do the South African headquarters provisions provide a competitive alternative for a gateway into Africa for international companies?
(2014) Phumaphi, Samantha; Gutuza, Tracy
Special tax regimes (“STR”) and tax havens are topics that feature in global news on an increasingly frequent basis in particular over the last few years. This can be partially attributed to the global financial crisis that has lead many countries being into financial strife coupled with news reporters and critics commenting on the amount of money that companies are avoiding paying in corporate tax due to the use of tax avoidance schemes and tax havens. Therefore Governments are under increasing pressure to curb the amount of revenues that are lost to other jurisdictions. However, whilst that makes the headlines, there is also a necessity for Governments to incentivise companies into their jurisdiction so to provide further revenue to their economy, in particular for the provision of additional jobs and to assist the property market following the crash, this can therefore be seen as very much a double edged sword. So whilst it is clear that a number of countries, governments and nongovernmental organisations including the Organisation for Economic Cooperation and Development and groups such as the Tax Justice Network are trying to rid the world of tax havens and countries offering special tax regimes, on the other side many Governments are also trying to lure large corporations into their jurisdictions by offering lucrative tax regimes. South Africa is one such country that has decided to incentivise foreign companies in particular those involved in cross border transactions into its jurisdiction by introducing its Headquarter Company Regime.
Open Access
Does a mineral right constitute 'immovable property' for purposes of the Income Tax Act and double tax treaties?
(2014) Govender, Preshnee; Gutuza, Tracy
This research paper analyses the income tax impact for international (non-resident) companies that dispose of their shares in mining or oil and gas companies situated in South Africa. Typically, a disposal of shares by a non-resident in a property-rich company in South Africa would attract CGT. In the case of the minerals sector, it is automatically assumed that a mining or oil and gas company is a so-called “land-rich” or “property-rich” company due to the nature of its operations. This paper seeks to test that assumption, ie do shares in a mining or oil gas company whose only asset is a mining or prospecting right or exploration or production right respectively qualify as an ‘interest in immovable property’ as that term is defined in the ITA for CGT purposes? To make this determination, the term ‘immovable property’ as it is used for common –law purposes and the potential misalignment of this definition when compared to the term as it is used in the ITA must be analysed.
Open Access
"Expenditure"
(2014) Beukes, Marvan; Gutuza, Tracy
This dissertation endeavours to analyse the case Commissioner for the South African Revenue Service v Labat Africa Ltd and its consequences in order to conclude whether the tax law created by the court is sound. Specifically it looks at the progression of the case through the different courts, as well as the other court cases referred to in the different courts. The research found that the case defined, for the first time, the term "expenditure" for South African Income Tax purposes. It also found that the new definition may have created consequences for the interpretation of other sections of the Income Tax Act.
Open Access
Financial and regulatory barriers to renewable energy
(2013) Maté, Ernest Lyatitima; Gutuza, Tracy
Climate change necessitates a shift from South Africa’s current fixation on coal fuelled energy to renewable energy. The private sector will play a pivotal role in making this shift. It is argued that there is a legal obligation to invest renewable energy. Such investment must take place within the existing regulatory and policy framework; however this framework is itself a barrier to private sector participation. Finance is the second barrier. An appropriate legal structure and entity must be used to raise the required funding but a variety of funding options exist. This paper examines the above barriers to private sector participation and proposes ways in which to overcome them.
Open Access
Financing oil and gas projects in Nigeria
(2014) Alonge, Funmilayo Ronke; Gutuza, Tracy
Oil and gas is a major source of energy worldwide. Therefore its significance for Nigeria as a major producer cannot be understated. Notwithstanding the huge revenue derived from oil and gas, its contribution to the Gross Domestic Product (GDP) is minimal. This can be ascribed to the fact that there has been minimal indigenous participation in oil and gas projects as this has often been undertaken by the International Oil Companies (IOCs). To address this, the Federal Government awarded marginal fields and oil blocks to independent indigenous oil companies and enacted the Nigerian Oil and Gas Industry Content Development Act in 2010. This has been of great benefit to indigenous participation. However, these indigenous companies often encounter a major problem in accessing finance for their projects. This dissertation examines the challenges to financing faced by the independent indigenous oil companies and how project financing will be the best means of financing a project by these companies.
Open Access
The impact of e-commerce on the permanent establishment definition
(2016) Wepener, Suzette; Gutuza, Tracy
The main object of the concept of the definition of a permanent establishment in a double tax agreement is to set out the type and permanency of business activities that an entity must conduct before they can be subject to tax in another jurisdiction. Furthermore, the definition of a 'permanent establishment' as defined in article 5 of the OECD model tax convention requires the existence of a fixed place of business. This indicates the existence of a facility with a certain degree of permanence. The internet has changed the traditional international business model. It is no longer necessary that the entrepreneur, or his employees, agents, branches or intermediaries is in the country where the business is being conducted. It is clear that the internet overcomes the traditional limitations of physical presence in a jurisdiction when doing business. This poses a challenge when it comes to the determination of a 'permanent establishment', as the test is based on a physical presence of an entity in a jurisdiction. I want to determine if the current concept of a permanent establishment is still adequate to address the challenges posed by e-commerce. Taking into account that e-commerce was not a factor when the basis of the definition of the definition of a permanent establishment was formulated. The views of the OECD on e-commerce will be analysed to determine what they envisage and if they are of the opinion that the current definition is adequate to address the concept and reality of e-commerce and the taxation thereof. It is important to explore the views of the rest of the world on e-commerce and the taxation thereof. A multinational entity must be aware of the tax presence it can create in a foreign country, especially when it comes to creating a permanent establishment in that foreign country. It is my aim to identify and discuss the challenges and difficulties e-commerce poses when determining the existence of a permanent establishment and also to research certain adaptions and recommendations of the current taxing system and relevant guidelines.
Open Access
The new dispensation governing the collection of Value Added Tax on electronic commerce supplies in South Africa
(2014) Mahlunge, Amanda Nyasha; Gutuza, Tracy
The primary focus of this paper is on the cross-border supply of electronic services into South Africa by non-resident e-commerce businesses. This paper will discuss the nature of electronic commerce (e-commerce) and electronic services; the impact that e-commerce has on indirect taxes such as value-added tax; the previous legislation and its shortfalls; the nature of the new legislated VAT amendments; the problems that were faced by the tax authorities in its efforts to enact the new tax VAT amendments; the problems that the South African Revenue Services (SARS) may face in enforcing compliance with the new tax legislation; the guidelines that have been put forward by the Organisation for Economic Co-operation and Development (OECD) with regard to international trade over the internet; and the measures that have been put in place in other jurisdictions that directly deal with e-commerce.
Open Access
Project finance law and regulation in Tanzania: a critical analysis
(2018) Ngwembe, Geofrey P; Gutuza, Tracy
Long term finance schemes are, to a little extent, employed in Tanzania since major economic reforms which occurred in the 20th C. Shifting from public finance mechanism, the government of Tanzania have initiated mechanism such as PPP in order to instil private sector in engaging in several economic activities. As projects basis form of investment have been adopted in catering with developmental plans, especially in becoming an industrialized nation - Tanzania - by 2025, an effective legal and regulatory framework for project finance is crucial. Despite having PPP, Tanzania still faces several challenges, especially on its recognition and implementation, mainly, inadequate legal framework as project finance not only caters for PPP transactions, but also for private and public finance of projects, lack of specific regulatory body/division, as well as extensive government interference in projects. The lack of an effective legal and regulatory framework for project finance mechanism deters its success unless it is redressed, hence the purpose of this dissertation which is to ascertain and review project finance setting in Tanzania, experiences and lessons will be drawn from the UK and South Africa in determining the legal and regulatory framework of project finance in Tanzania, tackling of challenges within, and way forward in the incorporation of project finance mechanism as a new mechanism in Tanzania's jurisdiction.
Open Access
The regulation of the private equity fund in South Africa
(2015) Reynolds, Julian Christopher; Gutuza, Tracy
This study examined the challenges confronting private equity funds. These funds face governance challenges, including a lack of transparency and disclosure to investors. Investor protection in leading jurisdictions ranges from voluntary self-regulation, to minimal regulatory measures and an exhaustive regulatory approach. These approaches have, however, proven limited with regard to both application and their effectiveness in promoting investor protection, and market efficiency. Two methods have been identified to address governance challenges. The legal tools include facilitating transparency, the disclosure of information and the promotion of investor protection. These tools include:1) A negotiated structural approach, with side letters that provide individual investors with information and the establishment of an advisory board with limited control over the fund's operations; and 2) A co-regulatory approach, which combines contractual, self-regulation, and financial regulations to address governance challenges efficiently and effectively. Both methods have potential to address the governance challenges and increased investor concerns that have arisen as a result of the manner in which private equity funds operate. The approach suggested by this study is based on an understanding of private equity as an asset class. The approach is effective and efficient. It encourage sand promotes investor protection, while at the same time promoting the South African private equity industry as a flexible and lucrative market. There has been limited critical legal assessment of governance mechanisms in the context of private equity. This study thus contributes to the body of knowledge on the legal assessment of private equity funds.
Open Access
Residence of an Entity for Tax Purposes ' South Africa: A Review of the Concept 'Place of Effective Management'
(2010) Majachani, Alex Farai; Davis, Dennis; Gutuza, Tracy
Open Access
The scope for multilateral international co-operation in tax affairs / The tax and exchange control consequences of virtual currency transactions in South Africa
(2017) Coelho, Andrew Satiro; Gutuza, Tracy
1. The scope for multilateral international co-operation in tax affairs: While some measures have been taken in the past to create some form of multilateral co-operation in respect of the enforcement of domestic tax laws, these have been limited either in scope or in scale, or both. This paper seeks to analyse the various attempts at multilateralism, investigate the theoretical reasons behind the perceived dominance of bilateralism in tax relations, and assess the scope for potential multilateral issues in the international tax law environment. 2. The tax and exchange control consequences of virtual currency transactions in South Africa: There is seemingly little research on how virtual currencies might be affected by domestic tax laws, or whether there should be a new tax regime implemented specifically for virtual currencies. This paper looks at how virtual currencies fit into the South African legislature and tax authorities' current tax and exchange control regime, as well as the problems this presents. It then compares that stance to select foreign jurisdictions before arriving at a conclusion at how the problems faced in South Africa might be better resolved. This results in a finding that while legislative measures might need to be taken in the future, it might only be an urgent necessity for the purposes of Exchange Control.