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In the tax court held in Durban: case no 11449

Thursday, 16 March 2006   (0 Comments)
Posted by: TaxFind™
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In the matter between First Appellant, Second Appellant, Third Appellant and the commissioner for the South African Revenue Service - Respondent

Mini Summary

As at 27 July 2001, the first appellant was a wholly owned subsidiary of an off-shore parent company based in the Netherlands.On that date, the Dutch company transferred its shares in the first appellant to another entity.The latter subsequently changed its name and the new entity was the second appellant herein.The third appellant became the holding company of the second appellant.

In 2001, the second appellant transferred its shares in the first appellant to the third appellant, which in turn transferred the shares to another company.

In January 2002, the first appellant registered the transfer of its shares to the second appellant and the subsequent transfer to the third appellant in its share register.The appellants applied to the respondent for a ruling to the effect that the transfers were part of a rationalisation scheme as defined, and as such each transfer was exempt from the payment of stamp duty.The respondent issued a ruling to the effect that the transfers did not constitute a rationalisation scheme as defined.

In 2004, the respondent issued a stamp duty assessment in respect of the three transfers of shares, calculating duty at a rate of 0,75% of the value of each transfer in terms of item 15(3)(h)(ii) of Schedule 1 to the Stamp Duties Act 77 of 1968, on the basis that the transfers had not been registered within six months from date of execution.In addition, the respondent imposed a validating penalty on each transfer for the late stamping of the instrument of transfer.

In the present appeal, the appellant challenged rate at which duty was calculated on the first and second transfers.

Held that the only issue to be determined was the appropriate rate of stamp duty payable in respect of the two transactions.The dispute between the appellants and the respondent was whether the rate of 0,25% was the appropriate rate of duty or whether the rate of duty was three times that amount.

The court found that the appellant's contention of the rate of 0,25% was correct.

To view full decision click here



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