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Call for comment: Proposed limitations against excessive interest tax deductions

02 May 2013   (1 Comments)
Posted by: Author: SARS Legal & Policy
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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 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 by 23 May 2013.

Thank you for assisting us in shaping legislation that will ultimately benefit the country and taxpayers.


Stephanus B. Truter says...
Posted 09 May 2013
Op die oog af lyk dit of dit hier slegs gaan oor rente betaal aan buitelanders of entieteite wat nie belasbare inkomste in RSA verdien nie. Ek is bekommerd dat dit die begin is van 'n proses en dat dit deurgetrek gaan word na enige entiteit/persoon in wie se hande die rente nie belasbaar gaan wees nie. Byvoorbeeld indien 'n persoon bo 75 wat al oor die R100 000 se rente kan verdien voordat dit belasbaar is. Dit moet beveg word aangesien die land se enterpreneurs die lenings van familielede nodig het om te kan handel dryf. So 'n familielid behoort geregtig te wees op rente teen 'n koers wat verband hou met die risiko van die lening. So kan SARS dit ook probeer deurtrek na intergroep entiteite in RSA - weereens kan die probleem aangespreek word deur eerder te kyk na die voor en nadele van 'n tipe groepsbelasting waar die verliese van entiteit aangewend kan word teen winste in 'n ander eintitiet in die groep.


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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