TLD Limited v Commissioner for the South African Revenue Service

• Jurisdiction: South Africa
• Judge: Griesel J
• Judgment Date: 16 November 2010
• Citation: 2013 JDR 0257 (Tax)
• Docket Number: 12432
• Court: Tax Court

Griesel J:

[1]

This is an appeal against an additional assessment raised by the respondent ('the Commissioner') in terms of s 79 of the Income Tax Act 58 of 1962. The assessment is based on a taxable gain which, according to the Commissioner, arose from a deemed disposal by the appellant of an asset during the 2003 tax year.

2013 JDR 0257 p2

Griesel J

Factual background

[2]

The appellant is an investment holding company, incorporated in South Africa, with its registered office at Industria, South Africa. It is listed on the Johannesburg Stock Exchange.

[3]

During the tax year under consideration the appellant's only relevant asset was its 100% shareholding in TDO Hld Limited. The latter company, in turn, owned 100% of the shares in TDO Limited, a company incorporated in Guernsey, which owned approximately 65% of the issued share capital in the UK based company, ABC plc.

[4]

On 2 July 2002, at a meeting of the appellant's board of directors in Luxembourg, it was resolved that all further board meetings would be held in that country. This had the effect that, as from 2 July 2002, the appellant became effectively managed in Luxembourg and liable for tax in that country.

[5]

After that date, the appellant maintained a presence in South Africa in the person of one of its executive directors, Mr M, who continued to perform certain functions on behalf of the appellant from its registered office in Industria until 29 January 2003, when he left South Africa in order to relocate to Europe.

[6]

Notwithstanding the relocation of the seat of the appellant's effective management to Luxembourg with effect from 2 July 2002, the appellant remained a 'resident' of the Republic for purposes of the Act by reason of para (b) of the definition relating to any 'person (other than a natural person) which is incorporated, established or formed in the

2013 JDR 0257 p3

Griesel J

Republic. . .' This status changed with effect from 26 February 2003, when the following words were added to the definition:

'but does not include any person who is deemed exclusively a resident of another country for purposes of the application of any agreement entered into between the governments of the Republic and that other country for the avoidance of double taxation'. [1]

[7]

It is thus common cause that –

•

by 2 July 2002 the appellant became effectively managed in Luxembourg;

•

by 29 January 2003 (with the relocation of Mr M) any permanent establishment which the appellant might have had in the Republic up to that date ceased to exist;

•

by 26 February 2003 the appellant ceased to be a resident of the Republic.

Commissioner's grounds of assessment

[8]

Based on the foregoing facts, the Commissioner...