Income Tax Case No: 11449

• Jurisdiction: South Africa
• Judge: Theron J
• Judgment Date: 16 March 2006
• Docket Number: 11449
• Hearing Date: 24 November 2005
• Citation: 2006 JDR 0510 (NSpCrt)

Theron J:

Introduction:

This is an appeal in respect of an assessment for stamp duty raised in respect of two separate transfers of shares involving the appellants.

Background:

As at 27 July 2001, the first appellant was a wholly owned subsidiary of an off-shore parent company, A Netherlands, ("A"), a Dutch registered company. On 27 July 2001, A transferred its shares in the first appellant to A PLC (the first transfer). A PLC then changed its name to A HOLDINGS PLC (the second appellant). Another company within this group of companies changed its name to A PLC (the third appellant) and became the holding company of A HOLDINGS PLC.

On 1 August 2001, A HOLDINGS PLC transferred its shares in the first appellant to A PLC (the second transfer). On 2 August 2001, A PLC transferred its shares in the appellant to B PLC (the third transfer). All of these transfers were part of an international group reorganisation.

On 22 January 2002, the first appellant registered the transfer of its shares to the second appellant and the subsequent transfer to the third appellant in its share register. On 23 January 2002, the appellants applied to the respondent for a ruling to the effect that the transfers were part of a rationalisation scheme as defined, and as such each transfer was exempt from the payment of stamp duty. The respondent issued a ruling to the effect that the transfers did not constitute a rationalisation scheme as defined. On 30 January 2002, the appellants paid stamp duty in respect of the third transfer.

On 1 April 2004, the respondent issued a stamp duty assessment in respect of the three transfers of shares, calculating duty at a rate of 0.75% of the value of each transfer in terms of item 15(3) (h) (ii) of Schedule 1 to the Stamp Duties Act, No 77 of 1968, on the basis that the transfers had not been registered within six months from date of execution. In addition, the respondent imposed a validating penalty on each transfer for the late stamping of the instrument of transfer.

The appellants objected to the assessment, as well as to the imposition of validating penalties. On review of the objection, the respondent issued a revised assessment on 27 May 2004, effectively imposing duty at a rate of 0.25% on the third transfer and retaining the duty at a rate of 0.75% on the first two transfers. No validating penalties were imposed.

2006 JDR 0510 p2

Theron J

The appellants subsequently submitted revised grounds of appeal, limiting the dispute to the rate at which duty was calculated on the first and second transfers. The appellants conceded that all three transfers were subject to the imposition of stamp duty, but at a rate of 0.25%. At the hearing of this matter it was common cause that the appellants have paid stamp duty, at a rate of 0.25%, in respect of all three transactions.

Issue:

The only issue to be determined is the appropriate rate of stamp duty payable...