scholarly journals Benhaus - a landmark decision, one less hoop for contract miners but a clarion call for an overhaul of the South African mining regime

2020 ◽  
Vol 120 (8) ◽  
Author(s):  
K. Thambi
Keyword(s):  
South African ◽  
Value Chain ◽  
Income Tax ◽  
Mining Industry ◽  
Third Party ◽  
Mining Activities ◽  
The South ◽  
Mining Operations ◽  
Tax Legislation ◽  
The Right

SYNOPSIS The mining industry has evolved, such that the means of production that were once in the hands of major players or power houses have become equally accessible to smaller entrants, i.e. junior mining companies and contract miners. Contract mining involves contractual relationships between mine owners or mineral right holders and third parties to conduct mining activities on behalf of the right holders. The current mining income tax legislation has been a considerable obstacle to contract miners. Under its terms, they have been viewed as mining on behalf of third-party mineral rights holders. As such, expenditure incurred in relation to contract mining activities was often disallowed by the South African Revenue Service (SARS). However, the recent judgement of the Supreme Court of Appeal, Benhaus Mining (Pty) Ltd v CSARS 2020 (3) SA 325 (SCA) (Benhaus), rightfully or wrongfully, appears to provide clarity regarding the fate of contract miners' involvement in the mining value chain. The taxpayer, a contract miner, was held to be conducting mining operations within the meaning of S15(a) read with si of the Income Tax Act 58 of 1962 (the Income Tax Act). This paper looks at how contract mining has traversed the mining tax landscape, the implications of the Benhaus judgment, and stresses the necessity for clear policy reform to the mining tax regime and equally to legislation framed to give effect to these policies. Keywords: Contract mining, owner mining, tax, DMRE, mining regime reforms.

scholarly journals A Post-Implementation Analysis Of The South African Mineral Royalty Regime

2013 ◽  
Vol 29 (3) ◽  
pp. 641
Author(s):  
Pieter Van der Zwan
Keyword(s):  
South African ◽  
Income Tax ◽  
Mining Industry ◽  
Mineral Resources ◽  
Fair Share ◽  
Font Size ◽  
The South ◽  
The Past ◽  
Tax Legislation ◽  
Mineral Wealth

<span style="font-family: Times New Roman; font-size: small;"> </span><p style="margin: 0in 0.5in 0pt; text-align: justify; line-height: normal; mso-pagination: none;" class="MsoNormal"><span style="font-family: &quot;Times New Roman&quot;,&quot;serif&quot;; font-size: 10pt;">The landscape of the South African mining industry has changed significantly over the past twenty years and has in recent times attracted attention by calls for nationalization of the industry. <span style="mso-spacerun: yes;"> </span>One of the proposed areas to address the concerns resulting in these calls for nationalization has been to consider whether the South African mineral royalty regime can be improved. <span style="mso-spacerun: yes;"> </span>The objective of this article is to evaluate whether the South African royalty regime effectively balances the objectives of the stakeholders in the industry and to recommend improvements where this balance may not be achieved. <span style="mso-spacerun: yes;"> </span>The analysis performed indicated that the introduction of the royalty regime increased the overall government take from the mining industry significantly and that the competitiveness of the South African mining industry as an investment destination need to be assessed. <span style="mso-spacerun: yes;"> </span>It was further found that the linkage between the royalty formula and the income tax legislation distorts the royalty levied in relation to the mineral resources that are depleted. <span style="mso-spacerun: yes;"> </span>It is submitted that the regime can be improved by defining a profitability indicator specifically for the purposes of determining mineral royalties. Lastly, it is recommended that measures to improve accountability in respect of the utilization of the royalties collected need to be considered as the lack of such measures may contribute to the perception that the nation does not receive its fair share of the mineral wealth.</span></p><span style="font-family: Times New Roman; font-size: small;"> </span>

scholarly journals Some Drastic Measures to Close a Loophole: The Case of Pienaar Brothers (PTY) LTD v Commissioner for the South African Revenue Service (87760/2014) [2017] ZAGPPHC 231 (29 May 2017) and the Targeted Retroactive Amendment of Section 44 of the Income Tax

2018 ◽  
Vol 21 ◽  
pp. 1-36
Author(s):  
Stephanus Phillipus Van Zyl ◽  
Liezel Gaynor Tredoux
Keyword(s):  
Mergers And Acquisitions ◽  
South African ◽  
Income Tax ◽  
Specific Reference ◽  
The South ◽  
Peace Of Mind ◽  
Tax Legislation ◽  
The Law ◽  
The Right

A taxpayer has the right to arrange his tax affairs within the constraints of the law to his best advantage to pay the least amount of tax. Coupled with this right is the taxpayer's right to certainty, which entails that the time of payment of taxes, the manner of payment, and the amount of payment must be clear and plain to the taxpayer and to any other person. Accordingly, a taxpayer must have peace of mind that revenue laws will not be amended arbitrarily, retrospectively, and with the effect that the taxpayer's position is affected negatively. The South African tax legislation allows the deferral of tax liability when amalgamation transactions, asset for share transactions, and mergers and acquisitions are embarked upon by a taxpayer. This article analyses the judgment in Pienaar v Commissioner: South African Revenue Services (87760/2014) [2017] ZAGPPHC 231 (29 May 2017) critically with specific reference to amalgamation transactions, the taxpayer's right to tax certainty, and the application of retroactive amendments to completed transactions

Changing South Africa's Competition Law Regime: A Populist Departure from International Best Practices†

2019 ◽  
Vol 10 (4) ◽  
pp. 232-240
Author(s):  
John Oxenham ◽  
Michael-James Currie ◽  
Andreas Stargard
Keyword(s):  
Best Practices ◽  
South African ◽  
Third Party ◽  
The South ◽  
Self Assessment ◽  
Public Interests ◽  
Initial Stage ◽  
Key Points ◽  
Dominant Firms ◽  
The Right

Key Points: The Amendment Bill alters key provisions of the South African Competition Act focusing specifically on the redistribution of wealth and transformation of ownership in lieu of pursuing traditional antitrust goals. The Bill provides for greater ministerial intervention at the initial stage of a merger (based on national security), during the merger investigation (based on public-interest grounds) and broadens the right of appeals to parties outside the merger control review. The Bill lowers the standard that the South African Competition Commission must meet to prosecute cases and foreshadows a risk of increased third-party interventionism more generally. The departure from a traditional substantial lessening of competition (SLC) test to an adverse effects-based test, which takes public interests considerations into account, is likely to result in the injection of greater subjectivity into the decision-making process and parties’ increased difficulty in self-assessment of conduct particularly in relation to dominant firms.

scholarly journals A Framework For The Income Tax Deductibility Of Intellectual Property Expenditure Incurred By South African Taxpayers

2013 ◽  
Vol 12 (3) ◽  
pp. 373
Author(s):  
Rudi Oosthuizen
Keyword(s):  
South Africa ◽  
Intellectual Property ◽  
South African ◽  
Income Tax ◽  
Case Law ◽  
Recent Case ◽  
Tax Legislation ◽  
Tax Deductions ◽  
The Right ◽  
The Cost

Taxpayers who use intellectual property (such as patents and trademarks) in their trade in the production of income may obtain the right of such use in a number of different ways. The nature of the transaction granting the taxpayer the use of intellectual property items determines the tax treatment thereof. Taxpayers may be able to claim deductions for the cost of using these items in terms of specific income tax sections or the general deduction formula as outlined by the Income Tax Act 58 of 1962. There are also a number of other sections in the Act which may affect the timing and extent of the deductions allowed. This article investigates the various income tax deductions which may be available to taxpayers in South Africa who make payments in respect of intellectual property. It considers the effect of important recent case law and changes to tax legislation on the timing and extent of these deductions and suggests a framework which can be applied to assist the taxpayer in understanding the structure of such deductions.

scholarly journals STEPS TO IMPROVE LOGBOOK COMPLIANCE FOR DIESEL REBATES: A PROCESS-DRIVEN APPROACH

2021 ◽  
Vol 32 (2) ◽  
pp. 122-134
Author(s):  
Refilwe Ngwaku ◽  
Janine Pascoe ◽  
Jan Vosloo ◽  
Jean van Laar
Keyword(s):  
Data Quality ◽  
South African ◽  
Measurement Data ◽  
Mining Industry ◽  
Quality Data ◽  
The South ◽  
Mining Operations ◽  
Data Reporting ◽  
Data Measurement

Diesel accounts for up to 46 per cent of mining operations costs. In 2001, the Customs and Excise Act was amended to allow rebates for qualifying diesel users. The rebate aims to protect the international competitiveness of the South African mining industry. One of the key requirements for the diesel rebate is to submit logbooks that are compliant; however, the mining industry is struggling to maintain accurate logbook verification. Failure to comply with logbook requirements has prevented eligible mines from benefitting from the rebate. This paper presents a stepwise methodology to support the values reported in logbooks and submitted to the South African Revenue Service (SARS). The methodology focuses on four issues of data quality: data measurement, data verification, data traceability, and data reporting. With this approach, 151 errors were identified and corrected in a case study. A compliant logbook is shown to be the first step towards improved diesel management.

scholarly journals An evaluation of interest deduction limitations to counter base erosion in South Africa

2018 ◽  
Vol 21 (1) ◽  
Author(s):  
Pieter Van der Zwan ◽  
Daniel P. Schutte ◽  
Waldo Krugell
Keyword(s):  
South Africa ◽  
South African ◽  
Income Tax ◽  
The South ◽  
Profit Shifting ◽  
Present Evidence ◽  
Tax Legislation ◽  
Tax Returns ◽  
The Mean ◽  
Using Data

Background: The Organisation for Economic Cooperation and Development (OECD) made a number of recommendations in relation to interest deduction limitations as part of the Base Erosion and Profit Shifting (BEPS) project. In 2016 the South African National Treasury indicated that the interest deduction limitations contained in the Income Tax Act would be reviewed in the light of these recommendations. Aim: This paper aimed to describe funding structures of companies in South Africa liable for tax and how this relates to other characteristics, including ownership, of the companies. Setting: The research was performed using data from tax returns submitted by companies liable for income tax in South Africa. Methods: This paper reports on descriptive analyses of the research conducted. Results: The results showed that the mean interest-to-earnings before interest, taxes, depreciation, and amortisation (EBITDA) ratio for certain foreign-owned entities differed significantly from that of domestically owned entities. Conclusion: The results may present evidence of profit-shifting activities. They also highlight trends in interest-to-EBITDA ratios that may be of relevance for future legislative developments. Further related research is required if interest deduction limitations in the South African tax legislation are to be reviewed in light of the OECD proposals.

scholarly journals Exploring the challenges associated with the greening of supply chains in the South African manganese and phosphate mining industry

2014 ◽  
Vol 8 (1) ◽  
Author(s):  
R.I. David Pooe ◽  
Khomotso Mhelembe
Keyword(s):  
Supply Chain ◽  
South African ◽  
Environmental Governance ◽  
Mining Industry ◽  
Monitoring And Control ◽  
The South ◽  
Phosphate Mining ◽  
Phosphate Industry ◽  
Management Recommendations ◽  
And Control

As with most mining activities, the mining of manganese and phosphate has serious consequences for the environment. Despite a largely adequate and progressive framework for environmental governance developed since 1994, few mines have integrated systems into their supply chain processes to minimise environmental risks and ensure the achievement of acceptable standards. Indeed, few mines have been able to implement green supply chain management (GrSCM). The purpose of this article was to explore challenges related to the implementation of GrSCM and to provide insight into how GrSCM can be implemented in the South African manganese and phosphate industry. This article reported findings of a qualitative study involving interviews with 12 participants from the manganese and phosphate industry in South Africa. Purposive sampling techniques were used. Emerging from the study were six themes, all of which were identified as key challenges in the implementation of GrSCM in the manganese and phosphate mining industry. From the findings, these challenges include the operationalisation of environmental issues, lack of collaboration and knowledge sharing, proper application of monitoring and control systems,lack of clear policy and legislative direction, the cost of implementing GrSCM practices, and the need for strong leadership and management of change. On the basis of the literature reviewed and empirical findings, conclusions were drawn and policy and management recommendations were accordingly made.

The use of elongate support in the South African Mining Industry

2018 ◽  
pp. 343-347
Author(s):  
F.J. Glisson ◽  
D.H. Kullmann ◽  
A.E. Vidal da Silva
Keyword(s):  
South African ◽  
Mining Industry ◽  
The South

scholarly journals The competitive status of the South African Wheat Industry

2016 ◽  
Vol 9 (3) ◽  
pp. 651-666 ◽  
Author(s):  
Johannes Van der Merwe ◽  
Philippus Cloete ◽  
Herman Van Schalkwyk
Keyword(s):  
South Africa ◽  
Competitive Advantage ◽  
South African ◽  
Wheat Flour ◽  
Value Chain ◽  
Institutional Environment ◽  
The South ◽  
Wheat Market ◽  
The Usa ◽  
Trade Partners

This article investigates the competitiveness of the South African wheat industry and compares it to its major trade partners. Since 1997, the wheat-to-bread value chain has been characterised by concentration of ownership and regulation. This led to concerns that the local wheat market is losing international competitiveness. The competitive status of the wheat industry, and its sub-sectors, is determined through the estimation of the relative trade advantage (RTA). The results revealed declining competitiveness of local wheat producers. Compared to the major global wheat producers, such as Argentina, Australia, Brazil, Canada, Germany and the USA, South Africa’s unprocessed wheat industry is uncompetitive. At the same time, South Africa has a competitive advantage in semi-processed wheat, especially wheat flour. The institutional environment enables the importation of raw wheat at lower prices and exports processed wheat flour competitively to the rest of Africa.

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