Editorial

• Jurisdiction: South Africa
• Date: 01 March 2023
• Published date: 01 March 2023
• DOI: 10.10520/ejc-btclq_v14_n1_a1
• Pages: v-vi
• Author: Des Kruger Kruger

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© Juta and Company (Pty) Ltd

Editorial

DES KRUGER

There can be little argument that our tax laws are complex. Added to the

complexity of our tax laws is a large measure of uncertainty in the appli-

cation of these complex laws. Should anyone have any doubt regarding

these two statements, this will be quickly dispelled after reading these three

erudite articles.

* * *

The f‌i rst article is by Ed Liptak, who had been very heavily involved in the

design of South Africa’s new general anti-avoidance rules (GAAR) while

he was still with SARS. Liptak’s article focuses on one important aspect

of the GAAR, namely s80J of the Income Tax Act 58 of 1962 (‘the Act’).

Section80J was introduced in 2006 as part of the then new GAAR. This

section requires the Commissioner to notify a taxpayer at the point in

an audit when he/she f‌i rst comes to believe that the GAAR may be appli-

cable to an arrangement entered into or carried out by the taxpayer. It was

enacted in response to concerns that the new GAAR might be automati-

cally relied upon by SARS as a ‘catch-all’ section of last resort without due

and proper consideration. Commentators also expressed concerns about

conduct of audits under former s103, particularly with respect to delays

they encountered and the time and expensed they incurred.

The author noted that two recent judgments have raised concerns about

the current approach being taken to s80J by taxpayers and, to a certain

extent, SARS itself. In particular, taxpayers appear to be taking the position

that s80J(1), read together with the statutory def‌i nition of ’arrangement’,

have imposed a burden upon the Commissioner to identify and describe

a transaction, operation or scheme with an exacting degree of precision

never before required under the former s103 or its predecessors. Liptak

argues that this approach cannot be support by a textual, contextual, and

purposive interpretation of the provisions involved, and, in fact, would

severely frustrate both the overriding purpose of the current GAAR and the

specif‌i c purposes of s80J itself.

* * *

Wally Horak and James McKinnell of Bowmans provide interesting insight

on the recent judgment by the Supreme Court of Appeal (SCA) in the case

of CSARS v Coronation Investment Management SA (Pty) Ltd, that has caused

signif‌i cant uncertainty and concern amongst South African multina-

tional enterprises which operate via subsidiaries in foreign countries. The

judgment had to consider the requirements under s9D of the Income Tax

Act to qualify for the foreign business establishment (FBE) exemption from