South Africa is about to introduce a carbon tax on new vehicles which is designed to curb carbon dioxide emissions. According to the structure, which will become effective on 1 March, the ad valorem duty on a vehicle with a R300 000 retail price drops from 6.5% to 3.8%, for a R200 000 vehicle from 4.1% to 2.2%, and for one worth R150 000 from 2.9% to 1.4%. The duty on a vehicle with a R1m retail price comes down from 20% to 15% and a R1.3m vehicle's import duty remains 20%.

This supplementary "luxury tax" will be levied at the rate of 8% on a new vehicle spewing greenhouse gas at a rate of 240 grams per kilometre, 10.7% on 280 grams and 12% on 300 grams. Vehicles with greenhouse gas emissions of under 120 grams per kilometre will be exempt from the tax.

Commenting on the looming tax levy, the director of the National Association of Automobile Manufacturers of SA (Naamsa), said this tax could send the motor industry, which is gradually emerging from the downturn, back into recession. The big unhappiness by stakeholders is the fact that the fuel sold in South Africa does not comply with the new technological requirements necessary to avoid the green tax.

Carbon tax is common in developed first world countries, but the question is whether it is relevant for a developing country like South Africa. Commentators believe that this will widen the gap between the rich and the poor even more?

Yours truly,
Stiaan Klue

The Johannesburg Tax Court recently had occasion to consider the question of whether a vendor was entitled to claim input tax credits in relation to goods that it distributed free of charge. In particular, the taxpayer, even though an association not for gain, was registered as a VAT vendor. Apart from the taxable supplies made by the taxpayer, it also paid VAT on the importation of goods as well as expenses relating to reading and other material produced and printed locally, which were distributed by the taxpayer.

South Africa is about to introduce a carbon tax on new vehicles. Now this article is certainly not going to pretend that carbon emissions don't need to be curbed, but this new scheme is nothing short of another cash cow for the treasury.

For most taxpayers, the periodic intrusion into their lives of an obligation to pay tax to SARS is unwelcome. Even less welcome is the receipt of a notice in terms of section 99 of the Income Tax Act requiring the recipient to remit to SARS an amount due in respect of the tax liability of another person out of funds held on behalf of that person.

What is a tax? At first blush, this may seem a philosophical question of only academic interest. In this case, however, a very practical consequence turned on the answer. If the amount claimed by the Maize Board was a “tax”, then its claim prescribed in 30 years. If it was not a tax, but merely a “debt”, then the claim would prescribe in three years, with the result that the claim against Epol (Pty) Ltd had already prescribed and was thus irrecoverable.

The next National SARS stakeholders meeting is 9 February 2010. Tax practitioners are requested to report operational and system issues by completing the Tax Practitioners'Issues List. All issues need to be communicated to SAIT before 7 February 2010 at 12:00.

If you consider that when you attend and interview you have, on average, just over an hour to impress a future employer, 'Be prepared' should be your motto. In the current market, when positions in tax are few and far between, it is vital to give yourself as many competitive advantages as possible. After all, as a tax professional you wouldn't do a pitch to a client or to the board without a considerable amount of preparation. So no matter how good your CV, your experience and qualifications, I would always recommend that you do the following.

This note provides clarity regarding the interpretation and application of the provisions of section 12H that relate to the deduction of the learnership allowance for the entering into or completion of a registered learnership agreement.

SARS this week issued issue 35 of VAT news which deals with: Legislative amendments; Remission of interest; New voluntary registration threshold; Supplies for no consideration made by associations not for gain; and Land affairs subsidies.

With effect from 1 February 2010 the SARS Contact Centre's working hours will be Monday to Friday from 8h00 to 17h00, except on Wednesdays when working hours will be 09h00 to 17h00. SARS continues to seek ways to improve its service to the general public, registered taxpayers and traders. To further improve the level of service, the SARS Contact Centre requires one hour per week to train our Contact Centre staff.

This ruling deals with the deductibility of interest incurred on a loan to acquire restricted equity instruments as part of a share incentive scheme.

This ruling deals with the question as to whether the reference in section 7(5B) of the Act to the repealed Co-operatives Act, No. 91 of 1981 is in fact a reference to the Co-operatives Act, No. 14 of 2005 by applying section 12(1) of the Interpretation Act, No. 33 of 1957.

This ruling deals with the capital gains tax consequences which may arise when one class of preference shares is re-designated to another class of preference shares in circumstances where the two classes of preference shares are almost identical.

This ruling deals with – whether the transfer of trust funds held in an offshore trust to newly formed offshore discretionary trusts (New Trusts) will trigger donations tax and/or capital gains tax (“CGT”); whether the future income earned by the assets to be transferred will result in income in the hands of the settlors; whether a future disposal of the assets by the New Trusts without any of the gain vesting in the beneficiaries is a CGT event; and the income tax implications in respect of loans made to the New Trusts.

This ruling deals with whether the value of improvements on leasehold property, if effected by the tenant, will constitute gross income in the hands of the landlord.

This ruling deals with the VAT implications for an entity relevant to the importation of refined products into the Republic of South Africa (the Republic) from another entity for purposes of being processed and the subsequent exportation of the end products to that other entity or customers of that other entity.

This ruling deals with the potential adjustment of the balance of assessed loss and the recoupment of amounts previously allowed as deductions against income when inter-company loans are extinguished as a result of a voluntary winding-up. This ruling also deals with the VAT consequences relating to a potential input tax deduction in respect of taxable supplies previously made, which will become irrecoverable in the future.

This ruling deals with the questions as to – when vesting take place for purposes of section 8C(3) of the Act; and whether an interest expense incurred in respect of the loan account obtained from a shares incentive trust to finance the purchase price of the shares, can be taken into account in calculating the "gain" for purposes of section 8C(2) of the Act.

SARS is again conducting a survey amongst tax practitioners. This anonymous feedback will be used to help SARS understand the nature of practitioners' engagements with SARS, and to enhance its service offerings to practitioners.

On 24 November 2009, the OECD Committee on Fiscal Affairs released for public comment a proposed draft of the new Article 7 of the Model Tax Convention.

On 27 January, tax and development experts decided to set up an Informal Task Force on Tax and Development. With developing countries and other key stakeholders – including NGOs and business – as members, the Task Force will develop clear and effective mechanisms to make progress in the field of tax and development.

On 9 September 2009, the OECD Committee on Fiscal Affairs released for public comment a proposed revision of Chapters I-III of the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.

This paper was written by Prof. Paul Ekins and Dr. Roger Salmons, as a contribution to the project on Taxation, Innovation and the Environment of OECD’s Joint Meetings of Tax and Environment Experts.

This paper was prepared by Herman Vollebergh of Netherlands Environmental Assessment Agency, as a contribution to the project on Taxation, Innovation and the Environment of OECD's Joint Meetings of Tax and Environment Experts. It studies the impacts of motor vehicle fuel taxes and mandatory fuel efficiency standards on relevant car-related innovation activity in selected car-producing countries.