Page 1106 - SAIT Compendium 2016 Volume2

MEMORANDUM ON THE OBJECTS OF TAX ADMINISTRATION LAWS AMENDMENT BILL, 2015 Ad para (b): The proposed amendment is consequential to the above.
2.31 Taxation Laws Second Amendment Act, 2008: Amendment of section 21
The amendment of section 21 of the Taxation Laws Second Amendment Act, 2008, is consequential to the amendments to paragraph 13 of the Fourth Schedule to the Income Tax Act, 1962, as explained in paragraph 2.12 above.
2.32 Mineral and Petroleum Resources Royalty (Administration) Act, 2008: Amendment of section 14
The proposed amendment inserts a reference to the Tax Administration Act, 2011, and grounds for the remittance of the penalty. Although the imposition of the underestimation penalty referred to in section 14 will be regulated by Chapter 15 of the Tax Administration Act, 2011, the grounds for remittance are unique to the tax type under the Mineral and Petroleum Resources Royalty Act. This is, for example, similar to the manner that the underestimation penalty for provisional tax under paragraph 20 of the Fourth Schedule to the Income Tax Act, 1962, is regulated.
2.33 Tax Administration Act, 2011: Amendment of section 1
Ad para (a): This amendment proposes a common term including all customs and excise legislation to avoid having to refer to each Act separately.
Ad para (b): Greater transparency and the automatic exchange of information between tax administrations are important steps in countering cross border tax evasion, aggressive tax avoidance and base erosion and pro t shifting (BEPS) through, for example, inappropriate transfer pricing arrangements. Paragraph (a) of the proposed new de nition is required to implement a scheme under which SARS may require South African nancial institutions to collect information under an international tax standard, such as the OECD Standard for Automatic Exchange of Financial Account Information in Tax Matters, which encompasses the Common Reporting Standard (CRS), that was endorsed by G20 Finance Ministers in 2014. In order to implement the standard on a consistent and ef cient basis, certain nancial institutions must report on all account holders and controlling persons, irrespective of whether South Africa has an international tax agreement with their jurisdiction of residence or whether the jurisdiction is currently a CRS participating jurisdiction. This will substantially ease the compliance burden on reporting nancial institutions as they would otherwise have to effect system changes and collect historical information each time a jurisdiction is added to the CRS or South Africa concludes a new international tax agreement. The reporting nancial institutions will, pursuant to this amendment, be obliged by statute to obtain the information and provide it to SARS. Paragraph (b) of the proposed new de nition of ‘international tax standard’ includes the country-by-country reporting standard for multinational enterprises. This originates from a report in September 2014 by the countries involved in the OECD/G20 BEPS Project titled ‘Guidance on Transfer Pricing Documentation and Country-by-Country Reporting’. This report described a three- tiered standardised approach to transfer pricing documentation that consists of a master le, a local le and a country- by-country (CbC) Report. Its inclusion is part of establishing the framework for obtaining CbC Reports, irrespective of whether South Africa has international tax agreements with all the jurisdictions in which a group does business or whether the jurisdictions are currently CbC participating jurisdictions. This amendment will come into operation on the date of promulgation of this Act.
Ad para (c): The de nition of ‘tax Act’ is amended to include the new de nition ‘customs and excise legislation’.
2.34 Tax Administration Act, 2011: Amendment of section 3 Ad para (a): See the note on paragraph 2.33 above.
Ad para (b): The proposed amendment is a technical correction to align the current provision with the de nition of ‘international tax agreement’ in section 1. See also the note on paragraph 2.33 above.
2.35 Tax Administration Act, 2011: Amendment of section 6
The proposed amendment is a technical correction to clarify that a SARS of cial may execute a task authorised by a SARS of cial in section 6(3).
2.36 Tax Administration Act, 2011: Amendment of section 11
Section 11(1) was essentially intended to deal with civil proceedings where the authority to institute the proceedings is not otherwise prescribed in the speci c sections of the Tax Administration Act, as well as other matters such as review applications under the Promotion of Administrative Justice Act, 2002 (‘PAJA’). Recent arguments surfaced that each SARS deponent in litigation must have a section 11(1) authorisation from the Commissioner, even if the deponent is otherwise authorised to institute or defend legal proceedings under the Act. Examples of the latter include section 163 (application for preservation order), section 172 (obtaining a civil judgment), section 177 (institution of proceedings for liquidation) and section 186 (application for compulsory repatriation of foreign assets of taxpayer). These sections speci cally prescribe who may institute the proceedings, for example a senior SARS of cial in the case of a section 163 application. An additional authorization under section 11 is not required for proceedings under these sections. This is given express effect by the words ‘unless authorised to do so under this Act’ included in the proposed amendment.
2.37 Tax Administration Act, 2011: Amendment of section 22 See paragraph 2.38.
2.38 Tax Administration Act, 2011: Amendment of section 26
In order to ensure that the relevant nancial institutions comply with international tax standards, such as the CRS, the proposed amendment will require them to register with SARS for this purpose. This registration will assist SARS in the administration and enforcement of international tax standards. A public notice will be published indicating the classes of persons to register and submit a return. This will be in line with the registration process that currently exists for purposes
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