Page 92 - SAIT Compendium 2016 Volume1

s 9D INCOME TAX ACT 58 OF 1962 s 9D
foreign companies ending during years of assessment commencing on or after that date.]
(7) and (8) ...
[Sub-ss. (7) and (8) deleted by s. 10 (1) (j) of Act 59 of 2000.]
(9) Subject to subsection (9A), in determining the net income of a controlled foreign company in terms of subsection (2A), there must not be taken into account any amount which—
(a) ...
[Para. (a) deleted by s. 22 (1) (g) of Act 45 of 2003.]
(b) is attributable to any foreign business establishment of that controlled foreign company (whether or not as a result of the disposal or deemed disposal of any assets forming part of that foreign business establishment) and, in determining that amount and whether that amount is attributable to a foreign
business establishment—
(i) that foreign business establishment must be
treated as if that foreign business establishment were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the controlled foreign company of which the foreign business establishment is a foreign business establishment; and
(ii) that determination must be made as if the amount arose in the context of a transaction, operation, scheme, agreement or understanding that was entered into on the terms and conditions that would have existed had the parties to that transaction, operation, scheme, agreement or understanding been independent persons dealing at arm’s length;
[Para. (b) amended by s. 22 (1) (h), (j), (k), (l) and (m) of Act 45 of 2003, by s. 14 (1) (j), (k), (l) and (m) of Act 31 of 2005, by s. 9 (1) (g), (h), (i), (j), (k) and (l) of Act 20 of 2006, by s. 9 (1) (d) and (e) of Act 8 of 2007 and by s. 13 (1) (c) and (d) of Act 60 of 2008 and substituted by s. 25 (1) (h) of Act 24 of 2011 – date of commencement: 1 April 2012. This substitution applies in respect of foreign tax years of controlled foreign companies ending during years of assessment commencing on or after that date.]
(c) is attributable to any policyholder that is not a resident or a controlled foreign company in relation to a resident in respect of any policy issued by a company licensed to issue any long-term policy as de ned in the Long-term Insurance Act in its country of residence;
[Para. (c) inserted by s. 14 (1) (n) of Act 31 of 2005 and substituted by s. 19 (1) (g) of Act 31 of 2013 – date of commencement: 12 December 2013.]
(d) is subject to—
(i) the withholding tax on interest in terms of Part
IVB;
[Sub-para. (i) substituted by s. 19 (1) (h) of Act 31 of 2013 – date of commencement: 1 January 2015.]
(ii) the withholding tax on royalties in terms of Part IVA; or
(iii) the withholding tax on service fees in terms of Part IVC*,
[Sub-para. (iii) inserted by s. 19 (1) (i) of Act 31 of 2013 – date of commencement: 1 January 2016; the
subparagraph is to apply iro amounts that are paid or become due and payable on or after that date.]
after taking into account any applicable agreement for the prevention of double taxation;
[Para. (d) deleted by s. 10 (1) (l) of Act 59 of 2000 and inserted by s. 14 (1) (d) of Act 22 of 2012 – date of commencement: 1 July 2013. The inserted paragraph applies in respect of amounts that are paid or that become payable during foreign tax years ending during years of assessment commencing on or after that date.]
(e) is included in the taxable income of the company; [Para. (e) substituted by s. 16 (1) (m) of Act 7 of 2010.]
(f) is attributable to any foreign dividend declared to that controlled foreign company, by any other controlled foreign company in relation to the resident, to the extent that the foreign dividend does not exceed the aggregate of all amounts which have been or will be included in the income of the resident in terms of this section in any year of assessment, which relate to the net income of—
(i) the company declaring the dividend; or
(ii) any other company which has been included in the income of that resident by virtue of that resident’s participation rights in that other company held indirectly through the company
declaring the dividend, reduced by—
(aa) the amount of any foreign tax payable, in respect of the amounts so included in that resident’s income; and
(bb) so much of all foreign dividends received by or accrued to that controlled foreign company as was—
(A) excluded from the application of this section
in terms of this paragraph or section 10B (2)
(a), (b) or (c);
[Subitem (A) substituted by s. 25 (1) (i) of Act 24 of 2011
– date of commencement: 1 April 2012. This amendment applies in respect of foreign tax years of controlled foreign companies ending during years of assessment commencing on or after that date.]
(B) previously not included in the income of that resident by virtue of any prior inclusion in terms of section 9D;
[Para. (f) substituted by s. 22 (1) (n) of Act 45 of 2003.] (fA) is attributable to—
(i) any interest, royalties, rental, insurance premium or income of a similar nature which is paid or payable or deemed to be paid or payable to that company by any other controlled foreign company (including any similar amount adjusted in terms of section 31);
[Sub-para. (i) substituted by s. 19 (1) (j) of Act 31 of 2013 – date of commencement: 1 April 2014; this substitution applies in respect of years of assessment commencing on or after that date.]
(ii) any exchange difference determined in terms of section 24I in respect of any exchange item to which that company and any other controlled foreign company are parties;
(iii) any exchange difference in respect of any forward exchange contract or foreign currency option contract entered into to hedge the exchange item referred to in subparagraph (ii); or
* Part IVC was to have come into operation on 1 January 2016. The commencement date of that Part has, however, been substituted by s. 149 (1) of the Taxational Laws Amendment Act, 2015, and it is now to come into operation on 1 January 2017.
84 SAIT CompendIum oF TAx LegISLATIon VoLume 1