South African Treasury Releases Bill Clarifying Tax Laws

by Robert Lee, Tax-News.com, London

25 October 2002

The South African Treasury on Wednesday released its Revenue Laws Amendment Bill containing corrections and clarifications to existing tax policy.

Despite the fact that the bill contained almost 200 pages of amendments, top level officials have stressed that its release does not signal a change in tax policy, but is designed to address concerns with regard to the complexity of the country's tax code.

'Most of the pressure for the Bill comes from the taxpayer, especially in terms of company reorganisation,' Treasury Chief Director for Tax Policy, Martin Grote explained earlier this week.

One major provision contained within the bill was the relaxation and clarification of laws governing corporate reorganisations. Originally, South Africa's restructuring laws ruled out tax-free restructuring within companies which consisted of more than 50% financial instruments.

According to Mr Grote, the new rules will allow banks, insurance companies and other financial institutions to restructure in a tax-free manner, thus helping to reduce the potential 'cascading effect' of capital gains taxes on multi-tiered organisations.

Other measures introduced by the Revenue Laws Amendment Bill included amendments to CGT laws, changes to the residence-based taxation regime, and alterations to the treatment of strategic investment incentives and foreign dividends.

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