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

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. 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. 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. 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. 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. 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.

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

Journal of the Southern African Institute of Mining and Metallurgy ◽

10.17159/2411-9717/1031/2020 ◽

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.

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An evaluation of the income tax treatment of client loyalty programme transactions by South African suppliers

Journal of Economic and Financial Sciences ◽

10.4102/jef.v8i1.88 ◽

2015 ◽

Vol 8 (1) ◽

pp. 145-164

Author(s):

Sophia Brink

Keyword(s):

South Africa ◽

South African ◽

Income Tax ◽

International Literature ◽

Financial Loss ◽

The South ◽

The Past ◽

Loyalty Programme

The popularity of client loyalty programmes has increased drastically over the past few years, with more than 100 suppliers in South Africa currently making use of them. Despite the fact that client loyalty programmes have been prevalent in South Africa since the 1980s, the South African Revenue Service has issued no specific guidance on the income tax treatment of client loyalty programme transactions. The main objective of the research was to determine whether South African client loyalty programme suppliers treat client loyalty programme transactions correctly for income tax purposes. In order to meet this objective, available local and international literature were analysed to determine the proposed income tax treatment of a client loyalty programme transaction expenditure incurred by supplier for purposes of the client loyalty programme. The proposed correct income tax treatment was compared with a survey circulated to a population of client loyalty programme suppliers in South Africa. The comparison indicated that in practice the Income Tax Act No. 58 of 1962 is treated differently from the proposed treatment. This incorrect tax treatment could result in possible financial loss to the client loyalty programme supplier as taxpayer.

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On the geological and economic assessment of the Lower Amur region (Russia)

E3S Web of Conferences ◽

10.1051/e3sconf/202019203013 ◽

2020 ◽

Vol 192 ◽

pp. 03013

Author(s):

Viktor Kryukov ◽

Irina Kradenykh

Keyword(s):

Gold Mining ◽

Construction Materials ◽

Mining Industry ◽

Mineral Resources ◽

Economic Assessment ◽

Resource Base ◽

The Past ◽

Steady Growth ◽

Mineral Wealth

The development of regional economy is based on medium and long-term strategies (programs) for economic industrialization. These documents are of a sectoral or integrated nature. Republic of Sakha (Yakutia) and Kamchatka Territory have a scientifically substantiated strategy for the development of the mining industry. Despite its absence in Khabarovsk Territory, subsoil use in recent years has shown a steady growth in mining. The main volume of income comes from gold mining mainly in the northern and central parts of the region. Over the past 10 years, the most economically advantageous and geographically accessible minerals have been identified in the region. These include: coal, gold, platinum, tin, construction materials, groundwater. In the future, it is necessary to plan the development of copper-porphyry, alunite and polymetallic fields. The issues of increasing the resource base of liquid and strategic metals, formation of infrastructure, complexity of the use of mineral wealth and rational use of mineral resources remain problematic. A positive solution to problems is possible when developing and implementing an industry strategy. The basis for its formation is the geological and economic assessment of particular territories of the region.

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South African Income Tax Implications For Income Earned In Virtual Worlds

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v26i2.284 ◽

2010 ◽

Vol 26 (2) ◽

Cited By ~ 2

Author(s):

SJ Pienaar ◽

TL Steyn

Keyword(s):

South African ◽

Virtual Worlds ◽

Income Tax ◽

The United States ◽

Business Environment ◽

Point Of View ◽

Future Research ◽

Font Size ◽

The South ◽

Gross Income

There has been a significant increase in the number of internet business and e-commerce transactions over the last few years.  More recently, the development of virtual worlds on the internet has become an important feature of the business environment.  Although some research has been conducted in the United States of America into the tax consequences of income earned in virtual worlds, no such research has been conducted in South Africa.  This study adds to the American research by providing a critical analysis of the topic from the South African tax perspective.  The specific aim of the study was to determine whether income earned by South African residents from structured and unstructured virtual worlds respectively would qualify as gross income in terms of the South African Income Tax Act 58 of 1962.  It builds on previous international research, but offers a new perspective from the South African point of view. The study will make a valuable theoretical contribution to the application of the basic principles of gross income, and will deal with a brand new concept which did not exist when the principles were laid down.  The research was limited to determining whether the income earned in virtual worlds by South African residents who are taxed on their world-wide income would be included in gross income as defined by the South African Income Tax Act.  Capital gains tax consequences were not considered in any transaction where the income was classified as being of a capital nature.  Also excluded were deductions available to taxpayers in terms of the income included in gross income, and there is no detailed discussion  on when a taxpayer would be regarded as engaging in virtual worlds as a hobby as opposed to conducting a business.  Future research could be extended to this particular area.  This research concluded that most transactions in virtual worlds resulting in income would qualify as gross income under the South African Income Tax Act.  At this stage, the only possible disqualification in terms of the South African gross income definition appears to be income received “of a capital nature”.

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

South African Journal of Economic and Management Sciences ◽

10.4102/sajems.v21i1.1816 ◽

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.

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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

Potchefstroom Electronic Law Journal/Potchefstroomse Elektroniese Regsblad ◽

10.17159/1727-3781/2018/v21i0a3371 ◽

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

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

Journal of Transport and Supply Chain Management ◽

10.4102/jtscm.v8i1.139 ◽

2014 ◽

Vol 8 (1) ◽

Cited By ~ 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.

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The use of elongate support in the South African Mining Industry

Rock Support and Reinforcement Practice in Mining ◽

10.1201/9780203740460-32 ◽

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

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An evaluation framework for virtual reality safety training systems in the South African mining industry

Journal of the Southern African Institute of Mining and Metallurgy ◽

10.17159/2411-9717/53/2019 ◽

2019 ◽

Vol 119 (5) ◽

Author(s):

E.A. van Wyk ◽

M.R. de Villiers

Keyword(s):

Virtual Reality ◽

South African ◽

Mining Industry ◽

Safety Training ◽

Evaluation Framework ◽

The South ◽

Training Systems

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Cloud computing activities: Guidelines on the South African income tax classification

Journal of Economic and Financial Sciences ◽

10.4102/jef.v9i1.39 ◽

2017 ◽

Vol 9 (1) ◽

pp. 228-243

Author(s):

Shené Steenkamp ◽

Rudie Nel

Keyword(s):

Cloud Computing ◽

South African ◽

Income Tax ◽

Computer Hardware ◽

Correct Classification ◽

The South ◽

Know How ◽

Cloud Computing Service ◽

Source Test

The classification of income from cloud computing activities, according to the substance-over-form doctrine, is fundamental to the application of the correct taxation source test. The designation of IaaS, PaaS and SaaS, the three main cloud computing service models, clearly denotes the form of cloud computing activities as that of a service. However, the nature of cloud computing inherently raises the question of whether or not cloud computing income should not rather be classified as income from leasing activities or the imparting of know-how. In fact, the findings of this study suggest the classification would not necessarily always be that of a service. The possible classification as lease income can be either income from the lease of tangible computer hardware and/or of intellectual property (royalty income). The aim of this study was to formulate guidelines to assist in the correct classification of income from cloud computing activities. This was achieved by performing doctrinal research based on the South African and international literature.

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