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Aggressive Tax Structuring Could Hold Negative Implications For South Africa

01 May 2007   (0 Comments)
Posted by: TaxFind™
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Aggressive Tax Structuring Could Hold Negative Implications For South Africa

A growing number of large South African entities have reorganised their corporate structures in recent times.SARS recently released a statement by Commissioner Pravin Gordhan in which he acknowledged that these transactions were proof of growing investor confidence and provided substantial benefits for the economy through capital inflows and positive domestic and foreign investor sentiment.

Gordhan, however, expressed the reservation that, on occasion, these transactions could be structured in such a way that they also resulted in significant negative implications for the country.SARS has become aware of certain transactions that show complete and reckless disregard for tax morality and South African tax law.Through elaborate structuring,these deals seek to deliberately avoid the tax consequences that should flow from the associated transactions, thereby robbing not only the fiscus of tax revenue, but all South Africans.

In the statement, SARS declared that it intended carefully examining these transactions to ensure that no impermissible tax loss occurred.Said the Gordhan statement,"The architects of certain tax aggressive structures will not be permitted to abuse South Africa’s tax provisions in ways clearly unintended by the legislature.They will be vigorously challenged”. 

The intention was also to engage with stakeholders such as shareholders, investors and their advisors to see whether they were serious about issues such as poverty alleviation and the overall development of South Africa.SARS called upon corporate leaders to take greater responsibility to ensure that the advice that they pursue does not undermine South Africa’s tax base and the compliance morality.

Source: By TaxTALK


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