Case note: Is the foreign business establishment lagging behind new business models? Commissioner for the South African Revenue Service v Coronation Investment Management SA (Pty) Ltd [2023] ZASCA 10

• Citation: (2023) 35 SA Merc LJ 232
• DOI: https://doi.org/10.47348/SAMLJ/v35/i2a6
• Published date: 26 March 2024
• Pages: 232-240
• Author: Sengwane, K.
• Date: 26 March 2024

Case note

IS THE FOREIGN BUSINESS

ESTABLISHMENT LAGGING BEHIND NEW

BUSINESS MODELS? COMMISSIONER FOR

THE SOUTH AFRICAN REVENUE SERVICE v

CORONATION INVESTMENT

MANAGEMENT SA (PTY) LTD

[2023] ZASCA 10

KHODANI SENGWANE*

Lecturer, University of Pretoria

IINTRODUCTION

Controlled foreign company (CFC) rules are anti-avoidance rules to

ensure the taxation of prof‌its diverted offshore by South African

residents (Van der Zwan, ‘Cross-border transactions’ in Stiglingh (ed),

Silke: South African Income Tax (LexisNexis 2023) 889). The rules are

concerned with avoidance schemes and are not meant to deter real

cross-border transactions (Van der Zwan, ‘Cross-border transactions’ in

Stiglingh (ed), Silke: South African Income Tax (LexisNexis 2022)

871–872). In terms of the rules, prof‌its of a non-resident company may

also be liable for tax in South Africa at the hands of its resident

shareholder/s if the company is considered to be a CFC of such resident

shareholder/s (s 9D of the Income Tax Act 58 of 1962 (Act)). A company

will be considered to be a CFC if it is a foreign company where more than

50 per cent of the total participation rights or voting rights in that

company are directly or indirectly held or exercisable by one or more

residents (except headquarter companies) or the f‌inancial results of that

foreign company are ref‌lected in the consolidated f‌inancial statements

(prepared in terms of International Financial Reporting Standards 10)

of a resident company (s 9D of the Act).

*LLB (with distinction) LLM (UP) PGD in International Tax (UJ).

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https://doi.org/10.47348/SAMLJ/v35/i2a6

(2023) 35 SA Merc LJ 232

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