Call for comment: Proposed limitations against excessive interest tax deductions
02 May 2013
Posted by: Author: SARS Legal & Policy
Source: National Treasury
National Treasury issued a request for your comment on proposed limitations against excessive interest tax deductions. The objective is to incorporate commentary before finalising the legislation to be published in the forthcoming 2013 Taxation Laws Amendment Bill.
Internationally governments have recently expressed their concern over Base erosion (see the recent paper by the OECD (Base Erosion and Profit Shifting, available on http://www.oecd.org/tax/beps.htm)) which includes profit shifting schemes, like excessive deductions and income-shifting to low-tax countries. As noted in this report "base erosion constitutes a serious risk to tax revenues, tax sovereignty and tax fairness for many countries".
The South African government has expressed similar concerns, especially over the tax schemes that lead to base erosion and that were first raised in the section 45 proposals in 2011. Taking cognisance of the new OECD report, the National Treasury has proposed further rules to limit excessive interest tax deductions. Details of these new proposals are attached.
SAIT Tax Technical Department will be developing comments on these debt limitation rules as well as the hybrid debt instruments rules. Your comments and proposals would be welcomed and can be sent to firstname.lastname@example.org by 23 May 2013.
Thank you for assisting us in shaping legislation that will ultimately benefit the country and taxpayers.