SARS recently invited professional bodies and members to participate in focus group discussions around the country regarding the revision of the SARS Service Charter. The charter was first issued in 2005 and is "a statement of intent through which SARS undertakes to uphold and respect the rights of taxpayers, to educate taxpayers about their tax obligations and to positively influence the compliance climate in South Africa by adhering to these service standards". The charter is also a service commitment that sets performance targets which SARS must implement and with which compliant taxpayers can judge the quality of SARS's processes, its integrity and its conduct.

The Service Charter is not a document that gives taxpayers actionable legal rights in the event that it is breached or not complied with. Nor is it a statement of the law in regard to taxpayers' rights. Rather it is, firstly, "a statement of intent" by SARS, and secondly, a declaration of "performance targets which the organisation must implement . . . and with which compliant taxpayers can judge the quality of SARS's processes, its integrity and its conduct".

The significance of the Charter should not be underestimated. It articulates both a symbolic and a substantive break with the secretive and authoritarian mindset that characterised the South African revenue authority in the era predating the democratic Constitution. This inclusive approach towards the revision of the charter is welcomed and should be supported by tax practitioners and taxpayers.

Best wishes,
Stiaan Klue

Controlled foreign company ("CFC") legislation, governed by section 9D of the Income Tax Act 58 of 1962, serves as anti-avoidance legislation in South Africa’s residence-based tax system. Section 9D provides for the calculation of a deemed amount which must be included in the South African resident’s income.

It is not often that a customs duty case reaches the Supreme Court of Appeal, and this alone makes the decision in Pahad Shipping CC v CSARS [2009] ZASCA 172 unusual. The issue before the court was whether amounts labelled "finance charges", paid by the taxpayer as an importer of goods, to an import export agent in Dubai formed part of the "transaction value" of the goods imported by the taxpayer.

The decision of the Johannesburg Tax Court in KCM v CSARS (VAT 711 [2009] ZATC 2) will be of interest to the considerable number of VAT vendors who, usually for charitable reasons, provide at least some of their services or products free of charge. The issue that arises is whether such a VAT vendor is entitled to input tax credits in respect of such goods or services.

In a study conducted by Professor G K Goldswain on the application and constitutionality of the general onus of proof provision (section 82 of the Income Tax Act 58 of 1962), the presumption in favour of the State when criminal sanctions are applied to an offending taxpayer (section 104(2) of the Act) and the mechanics for imposing administrative sanctions in terms of section 76(1)(b) of the Act, the conclusion was reached that the reverse onus presumption, as provided for in terms of section 104(2) of the Act, is unconstitutional.

The issue before the court was whether amounts labelled "finance charges", paid by the taxpayer as an importer of goods, to an import export agent in Dubai formed part of the "transaction value" of the goods imported by the taxpayer. SARS was of the view that the answer was affirmative, and that the taxpayer had consequently underpaid the customs duty on the goods in question by some R250 000 and had underpaid VAT in an amount of some R130 000.

SARS will be holding focus group discussions around the revision of our Service Charter. Members are encouraged to participate in the initiative.

This ruling deals with the question as to whether the extraction of clay form the soil will constitute mining operations for income tax purposes.

This ruling deals with the question as to whether the place of business of a controlled foreign company (CFC) will be deemed as fulfilling the requirements of paragraph (a)(i) and (ii) of the definition of "foreign business establishment" in section 9D(1) of the Act by taking into account the utilisation of employees, equipment and facilities of any other CFC that has the same country of residence as and also forms part of the same group of companies as the CFC.

Interpretation note 52 was issued by SARS on 14 December 2009. This Note serves to set out the legal framework for instances under which tax periods may end on a day other than the last day of a month (hereinafter referred to as cut-off dates); provide, in terms of the binding general ruling contained in 5 hereof, the necessary authorisation granted by the Commissioner for changing of cut-off dates; and withdraw, in terms of section 5(2), VAT Practice Note No. 5 issued on 25 September 1991 with effect from the date of issue of this Note.

This guide contains information about the tax laws and some other statutory obligations that apply to small businesses. It describes some of the forms of business entities in RSA – sole proprietorship, partnership, close corporation and a private company – and explains in general terms the tax responsibilities of each.

This Interpretation Note provides information and guidance on the amalgamation of amateur and professional sporting bodies carried out under section 125.

The OECD has designed a handbook to provide tax examiners with information on the various bribery techniques used and the tools to detect and identify bribes. The OECD Bribery Awareness Handbook for Tax Examiners is now available in 18 languages.

A new law on access to bank information will enable Chile to exchange banking information under existing tax treaties, thereby complying with the internationally agreed tax standard for exchange of information.