Page 93 - SAIT Compendium 2016 Volume1

s 9D INCOME TAX ACT 58 OF 1962 s 9D
(iv) the reduction or discharge by any other controlled foreign company of a debt owed by that company to that other controlled foreign company for no consideration or for consideration less than the amount by which the face value of the debt has been so reduced or discharged,
where that controlled foreign company and that other controlled foreign company form part of the same group of companies; or
[Para. (fA) substituted by s. 14 (1) (o) of Act 31 of 2005 and amended by s. 9 (1) (m) of Act 20 of 2006, by s. 15 (1) (i) of Act 35 of 2007, by s. 8 (a) of Act 3 of 2008 and by s. 25 (1) (j) 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.]
(fB) is attributable to the disposal of any asset, as de ned in the Eighth Schedule (other than any nancial instrument or intangible asset as de ned in paragraph 16 of the Eighth Schedule), where that asset was attributable to any foreign business establishment of any other controlled foreign company, where that company and that other controlled foreign company form part of the same group of companies.
[Para. (fB) substituted by s. 14 (1) (p) of Act 31 of 2005 and by s. 9 (1) (n) of Act 20 of 2006.]
(g) . . .
[Para. (g) deleted by s. 10 (1) (o) of Act 59 of 2000.]
(h) . . .
[Para. (h) deleted by s. 22 (1) (o) of Act 45 of 2003.]
[Sub-s. (9) amended by s. 22 (1) (f) of Act 45 of 2003 and by s. 14 (1) (i) of Act 31 of 2005.]
(9A) (a) Any amount which is attributable to a foreign business establishment of a controlled foreign company as contemplated in subsection (9) (b) must, notwithstanding that subsection, be taken into account in determining the net income of that controlled foreign company if that amount—
(i) is derived from the sale of goods by that controlled foreign company to any connected person (in relation to that controlled foreign company) who is a resident, unless—
(aa) that controlled foreign company purchased those goods within the country of residence of that controlled foreign company from any person who is not a connected person in relation to that controlled foreign company;
(bb) the creation, extraction, production, assembly, repair or improvement of goods undertaken by that controlled foreign company amount to more than minor assembly or adjustment, packaging, repackaging and labelling;
(cc) that controlled foreign company sells a signi cant quantity of goods of the same or a similar nature to persons who are not connected persons in relation to that controlled foreign company, at comparable prices (after accounting for the level of the market, volume discounts and costs of delivery); or
(dd) that controlled foreign company purchases the same or similar goods mainly within the country of residence of that controlled foreign company from persons who are not connected persons in relation to that controlled foreign company;
[Sub-para. (i) substituted by s. 13 (1) (b) of Taxation Laws Amendment Act, 2015 – date of commencement: 1 January 2016; the substitution applies iro foreign tax years
of controlled foreign companies ending during years of assessment commencing on or after that date.]
(iA)
is derived from the sale of goods by that controlled foreign company to a person, other than a connected person (in relation to that controlled foreign company) who is a resident, where that controlled foreign company initially purchased those goods or any tangible intermediary inputs thereof from one or more connected persons (in relation to that controlled foreign company) who are residents, unless— (aa)those goods or tangible intermediary inputs
thereof purchased from connected persons (in relation to such controlled foreign company) who are residents amount to an insigni cant portion of the total goods or tangible intermediary inputs of those goods;
(bb) the creation, extraction, production, assembly, repair or improvement of goods undertaken by that controlled foreign company amount to more than minor assembly or adjustment, packaging, repackaging and labelling; or
(cc) the products are sold by that controlled foreign company to a person who is not a connected person in relation to that controlled foreign company, for physical delivery to a customer’s premises situated within the country of residence of that controlled foreign company;
(dd) products of the same or similar nature are sold by that controlled foreign company mainly to persons who are not connected persons in relation to that controlled foreign company for physical delivery to customers’ premises situated within the country of residence of that controlled foreign company;
[Sub-para. (iA) inserted by s. 13 (1) (c) of Taxation Laws Amendment Act, 2015 – date of commencement: 1 January 2016; the inserted subparagraph applies iro foreign tax years of controlled foreign companies ending during years of assessment commencing on or after that date.]
(ii) is derived from any service performed by that controlled foreign company to a connected person (in relation to that controlled foreign company) who is a resident, unless that service is performed outside the Republic and—
(aa)the service relates directly to the creation, extraction, production, assembly, repair or
SAIT CompendIum oF TAx LegISLATIon VoLume 1 85
Prelex
Wording of sub-para. (i) in force until 1 January 2016
(i) is derived from the disposal of goods by that controlled foreign company where those goods will be acquired directly or indirectly by a connected person (in relation to that controlled foreign company) who is a resident, unless—
(aa)the aggregate amount of tax payable to all spheres of government of any country other than the Republic by the controlled foreign company in respect of the foreign tax year of that controlled foreign company is more than 50 per cent of the amount of normal tax that would have been payable in respect of any taxable income of the controlled foreign company had the controlled foreign company been a resident for that foreign tax year; or
(bb)that amount is attributable to a permanent establishment of the controlled foreign company;
INCOME TAX ACT – SECTIONS