Print Page   |   Report Abuse
News & Press: Corporate Tax

Discussion paper on Interpretation note 6 - Place of effective management

14 September 2011   (0 Comments)
Posted by: SAIT Technical
Share |

Taxpayers and practitioners have raised concerns that foreign subsidiaries held by headquarter companies may be treated as South African tax residents under SARS’s approach to determining a company’s place of effective management, as outlined in Interpretation Note 6: Resident: Place of Effective Management (Persons other than Natural Persons) [IN 6], issued on 26 March 2002. Place of effective management is one of the two tests used to determine whether or not a company or other person other than a natural person (legal person) is a tax resident. In addition, the place of effective management test is also used as the "tie breaker” rule in many of the double taxation agreements (DTAs) that South Africa entered into with other countries, particularly those DTAs which are based on the Model Tax Convention on Income and Capital of the Organisation for Economic Cooperation and Development (OECD).This "tie breaker” rule applies to determine the tax residency of a legal person where that legal person could otherwise be considered a tax resident of both contracting states under their domestic laws.

This discussion document is intended to invite comments from taxpayers and practitioners regarding their concerns in this area and to provide a framework for discussion of possible revisions to IN 6. Like IN 6, the scope of this discussion document is limited to issues involving domestic and foreign companies. Legal persons other than companies, such as foreign hybrid entities and trusts, present separate and distinct issues and will be addressed in a subsequent project.

Comments should be submitted to technical@thesait.org.za no later than 30 October 2011.

To access the document, click here


WHY REGISTER WITH SAIT?

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.

MINIMUM REQUIREMENTS TO REGISTER

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.

Membership Management Software Powered by YourMembership  ::  Legal