Expatriate employees : to facilitate and pay for their tax compliance is a taxable benefit

• Published date: 01 December 2019
• DOI: 10.10520/EJC-1ac41514e7
• Pages: 25-28
• Author: Kevin Burt
• Date: 01 December 2019
• Record Number: btclq_v10_n4_a4

25

© SIBER INK

Expatriate Employees:

TO FACILITATE AND PAY FOR THEIR TAX

COMPLIANCE IS A TAXABLE BENEFIT

KEVIN BURT*

ABSTRACT

The author discusses the recent unanimous judgment of the Supreme Court

of Appeal in BMW SA (Pty) Ltd v C:SARS. BMW SA brought the appeal because

it was aggrieved by SARS’s decision to assess, as taxable benef‌its, payments

BMW SA had made to tax consultancy f‌irms that had assisted expatriate

employees to comply with South Africa’s tax laws during their secondments

in South Africa. The focus of the discussion is the rejection by the Supreme

Court of Appeal of the BMW SA’s contention that the f‌irms’ services were ‘at

least in part’ utilised by BMW SA. In the light of his analysis of the judgment,

the author concludes that the conclusion reached by the Supreme Court of

Appeal that the f‌irms’ services had only some ‘peripheral advantage’ to BMW

SA is open to question.

Introduction

Until the judgment of the Supreme Court of Appeal in BMW SA (Pty) Ltd

v Commissioner, South African Revenue Service1, which was delivered on

6 September 2019, companies in South Africa that employ individuals

seconded to work in South Africa by companies for whom they work

overseas, understood that they would not be granting a taxable benef‌it

to these employees by paying for the services of professional (mostly

accounting) f‌irms, which would assist their complying with our tax laws

during their secondments in South Africa. They understood that SARS

would not attempt to assess such necessary payments as being taxable

benef‌its in the hands of these employees. This was on the understanding

that facilitating compliance with our tax laws was to the advantage of SARS

and the country. The judgment is, therefore, likely to be controversial.

I have a few observations regarding the judgment. However, let me f‌irst

summarise the facts, which culminated in the appeal to the Supreme Court

of Appeal.

1

* Member of Johannesburg Bar.

[2019] ZASCA 107.