Tax is an ever-changing environment and the many intricacies and complications in tax legislation and administration no doubt give many members sleepless nights. This feature seeks to highlight challenges and changes on the tax horizon from the point of view of those taking the lead in tax

Withholding tax on services

In the Budget Speech of 2013 it was announced that a withholding tax on services would be introduced. The initial date was 2014 but implementation was subsequently postponed and the new effective date is 1 January 2016. Kemp Munnik explains

The purpose of the introduction of a withholding tax on services (WHTS) is mainly to identify and collect revenue from non-resident taxpayers. WHTS is usually levied on technical, management or consulting fees that are delivered by non-resident taxpayers in South Africa but that currently fall outside the tax net.

South Africa already has withholding taxes on interest, royalties and dividends.

Some of the reasons for the introduction of WHTS can be found in the explanatory memorandum on the Taxation Laws Amendments Bill 2013, which states that fees like interest and royalties create local deductions for tax and therefore erode the local tax base. Withholding tax is a form of protection of the tax base.

Another reason is that foreign entities with permanent establishments in South Africa are not registered for tax in South Africa and therefore not filing tax returns, In that way, they avoid paying tax in South Africa.

National Treasury’s stated intention is therefore not primarily to raise revenue but to use the WHTS as a tool to identify and collect tax from non-residents who operate in South Africa. National Treasury also indicted an increase in service fees paid to low-tax jurisdictions, especially after the introduction of withholding tax on interest (WHTI) and the increase of the withholding tax rate on royalties.

New Zealand, Australia, Malaysia and most African countries have a similar tax.


The current proposal is that 15% will be withheld on any service fee paid to non-residents, having been received or accrued to such non-residents from a South African source. The rate of the tax could also be reduced if a double tax agreement (DTA) is in place between South Africa and the country receiving the service fee.

The WHTS is a final tax, but there are a few exemptions:

  • If a foreign person spends more than 183 days in South Africa during the 12 months preceding the date on which the service fee is paid
  • If the service fee is effectively connected with a permanent establishment of that foreign person in South Africa if that foreign person is registered as a taxpayer in South Africa, or
  • If the service fee is subject to employees’ tax in South Africa

In some countries WHTS will be a final tax while in other countries withholding taxes are provisional taxes and can be offset against the final tax liability of the company concerned.

In South Africa, the proposal is that it will be a final tax.


Withholding tax normally leads to the gross-up of fees and is therefore to be borne by the South African company. This increases the cost of doing business. In contrast, in terms of Nigerian regulations, grossing-up provisions in contracts are illegal to the extent that it shifts the tax burden back to Nigeria.
Another issue that requires careful consideration is the complexity of determining the actual source of the service. The number of court cases generally dealing with a source of income is an indication of the complexity of this.

Listed companies are of not aware of whether the foreign person is rendering services in South Africa.
It is also of concern that this could become yet another negative consideration for foreign companies when deciding whether to invest in South Africa. Specifically so when considered together with our complex labour environment, the administrative burden in setting up business and the current concern regarding the state of South Africa’s economy and the resultant impact thereof on its credit rating.
The penalty that could be levied in terms of the Tax Administration Act for non-disclosure is severe.


Companies investing in South Africa or using South Africa as a springboard to the rest of Africa are usually domiciled in First World countries that also have WHTS and other similar taxes and are therefore familiar with this concept.

As mentioned above, companies will usually get a credit for the WHTS they have paid in South Africa either in terms of local legislation or if a DTA is in place between South Africa and their country of domicile. As such the WHTS therefore should not be the main reason for not investing in South Africa.
From a South African perspective, we need to broaden our tax base or the number of taxpayers who are paying tax.

It is common knowledge that the number of taxpaying companies is decreasing and that those that are paying are contributing less that expected as a result of the current economic climate. The result is that South African individuals are increasingly required to carry the tax burden.

Furthermore, some non-residents doing business in South Africa are not registered for tax and therefore do not pay their fair share of tax. WHTS could be a tool to identify such non-residents.

This, in turn, will increase the number of taxpayers, thus ensuring that the burden is increasingly carried not only by South African individuals but also by other foreign businesses that utilise our resources.
However, as with any other tax legislation, the success of the WHTS will be strongly influenced by the administrative burden that accompanies it. This is usually where new legislation fails.

A case in point is section 6quin in the draft Taxation Laws Amendment Bill 2015 where it is proposed that this section be scrapped – one of the reasons being  the resultant compliance burden  that SARS themselves have difficulty managing.


The South African government is facing an ongoing challenge to maintain the balance between encouraging foreign direct investment while ensuring that foreign businesses comply with local legislation and pay their fair share of tax in South Africa.

WHTS itself, I believe, will not be the only reason to detract foreign business from investing in South Africa – the key factor will be the administrative requirements and related costs associated with the new tax that South African and foreign businesses will incur.

AUTHOR | Kemp Munnik CA(SA) is Head of Tax at SizweNtsalubaGobodo


As Head of Local and International Tax at SizweNtsalubaGobodo (SNG) Africa, Kemp Munnik ensures clients’ tax requirements are serviced and is responsible for growing the consulting practice.

‘The biggest challenge is retaining quality employees, and getting businesses to appreciate the importance of the tax function, as well as the skills required to practise tax,’ he says.

Munnik, who qualified as a CA(SA) in 1989, worked for the South African Revenue Service (SARS) and then spent 13 years at BDO South Africa before taking on his current role at SNG in 2014.

At SNG he has succeeded in stabilising the team, recruiting qualified people, and ensuring they deliver quality work for key clients. ‘I’m motivated by the challenge of building a practice in a dynamic firm, as well giving talented people the opportunity to become experts in their field.’

Munnik says the tax landscape is going to be becoming more transparent and global as businesses search for new markets, and countries chase their fair share of tax. ‘Our own public sector needs resources to expand social and economic infrastructure. I’d like to see the tax burden should be spread more evenly among people through indirect taxes as this will ensure a larger source of income for government.’

Responsible tax for the common good

In a world of spiralling pressures on taxpayers and revenue collection authorities to increase the tax base of individual countries, what are the moral and ethical responsibilities of both parties? By Devon Duffield

South Africa is facing significant challenges in trying to bridge the gap between revenue collections and budgeted expenditure, and indications are that this gap is likely to become even wider. This creates tension between taxpayers and the revenue collection authorities – but what happens if that tension becomes a negative factor in and of itself? What are the legal, moral and social obligations of both the taxpayer and the revenue collector in building a positive, constructive engagement in this critical component of sustaining and building our economy?

Let us be clear – South Africa is not alone in its revenue authorities looking into every nook and cranny for additional revenue. The rest of the world is also stepping up their efforts when it comes to figuring out if taxpayers are paying the ‘correct’ amount of tax, or if their country is getting its fair share of the tax revenue that results from global businesses and digital commerce which transcend these national borders.

Of course, in South Africa the challenges related to the fiscal gap are starker than in many other parts of the world. Our country’s social spending needs cannot realistically decrease in the near term, and our spending on the infrastructure necessary for economic growth cannot be ignored or delayed. Also, we are facing the prolonged negative economic outlook attributed to many resource-based economies, and the tax burden is carried by a disproportionately small percentage of our population.


If the country needs to collect an increasing amount of revenue, this may be done in the following ways:

  • By increasing existing tax rates – and yes, there is room to suggest that compared to many other emerging and developed economies our rates (such as VAT) are still lower. Just recently, however, countries like Japan have started reducing tax rates to stimulate economic growth.
  • By raising new taxes such as carbon tax. However, the question is whether we can realistically afford this in the current economic circumstances and at a time when much of the world has not gone this route. It is not surprising to see this emerge as part of the ‘package’ of arrangements the steel industry is requesting from the government.
  • By collecting more from existing taxpayers. I would like to explore the implications of this point in more detail.


Let’s start with how much tax the taxpayer should pay. I do not believe that any responsible corporate or individual has a problem with paying the taxes that are (correctly) due. However, not only is it is becoming increasingly difficult to figure out the intricacies and complexities of applying Tax Law to complex and innovative business practices, but there is now also a growing global voice that taxpayers need to pay the ‘morally’ correct amount of tax. And just how much is that?

This, in itself, raises a number of questions. Is it morally correct to take advantage of different tax legislation in different countries to arrange one’s tax affairs? Do we have a moral obligation to ensure that tax leakage does not impoverish our country or continent? Are those charged with governance even having the conversations around this when arranging their business affairs?


In the face of this uncertainty, and in needing to fund the gap, taxpayers are seeing increasing queries into tax outcomes – and we are seeing the legislation being developed to give SARS the powers to do more and more of this via legislation such as the Tax Administration Act. Again, it is important to note that South Africa is not alone in affording our revenue authorities these rights, but it is how these rights are used that could cause an unintended backlash from responsible taxpayers. It is not a good thing for an economy if the revenue collection process is perceived as one where the taxpayer is bullied or where the only potential outcome is an additional tax payment, whether technically required or not! There is a growing concern among taxpayers that this is how interactions with revenue are heading.

Tax is already a complex matter and yes, boardrooms need to spend more time proactively deliberating on their tax arrangements, but I strongly believe that SARS needs to develop a risk-based approach to categorise entities on the strength of their tax governance – and act accordingly. One of my biggest concerns is that if SARS’ powers are perceived as being used for bullying this will not only hinder the proper governance of tax in boardrooms but could drive tax affairs underground. The Australian Tax Office, in working with similar legislation, has developed a very open, transparent and risk-based approach to dealing with taxpayers – and this would be a good next step for our country.


At KPMG, we have developed a mantra of Responsible Tax for the Common Good to guide tax professionals and clients around the world in managing their tax affairs. There are two parts to this that I would like to explore: who should be responsible and what is the common good.

Who should be responsible?

It is not only taxpayers that have to behave responsibly in arranging their tax affairs, the other half of that equation rests in how the tax revenues are expended. If taxpayers feel expenditure is poorly managed, there is less willingness to pay their taxes responsibly, let alone ‘morally’. In South Africa, the spectre of corruption and the cost to this country could easily be a deterrent to responsible behaviour from taxpayers. Our government is well aware of this – the trick is not merely to acknowledge the problem but to eliminate it! We have seen much done by government to make taxpayers feel proud about what their taxes are paying for, but the growing concerns about corruption could lay waste to this good work.

What is the common good?

This is an age-old question with roots firmly in the field of philosophy. Right from the earliest days of civilisation this concept has been directly applicable to the rationale for raising taxes. In essence, taxes are raised to be expended on items that community leaders deem to be ‘for the common good’ – whether this was building cities, or going to war! While this tends from earliest days to have a very nationalistic flavour, these days corporations are expected to think about the implications of their actions (including their tax arrangements) from a global perspective. Moreover, the debate these days happens in the press, by ordinary citizens, when a community feels they are not being fairly treated by global companies and the way they have arranged their tax affairs. Examples of this in the European and British press include the stories of Amazon, Google, Starbucks and closer to home, South African Breweries. While South Africa has not seen the same level of public activism around taxpayer arrangements, it is coming!


Taxpayers are living in unprecedented times. The legislation is growing in complexity, and the legislation is insufficient to keep up with global business practices. There is now a ‘moral’ and common good dimension that is expected to be understood by those charged with governance. Corporations are going to have to invest more in the management of their tax affairs than ever before, both in terms of skills available to them and the level of disclosure and governance of tax management processes throughout the organisation. This extends right from the tax rules built into systems all the way through to the risk classification of individual tax arrangements. The way we decide upon, talk about, and publicly report on our tax affairs is going to undergo significant change, too. In short, redesigning what tax governance looks like within corporations is going to become a vital component of every boardroom, management process and system in the business. No longer is tax risk management simply going to be the domain of a legal opinion which interprets a section of the tax legislation. And all of this is simply to ensure that taxpayers are ‘doing the right thing’.

However, an equally important tenet of this article is what government and SARS need to do to ensure that they, too, are behaving responsibly and for the common good.

AUTHOR | Devon Duffield CA(SA) is Head of Tax at KPMG


Devon Duffield has played many different roles in multiple countries since joining KPMG in 1990.
Today, as the firm’s Head of Tax and Legal, he is responsible for setting the strategy for growth and innovation for KPMG’s business in South Africa and across the continent to meet clients’ growing needs in this area. He has also led the firm’s transformation initiatives for several years.

‘The key priority for any role player in taxation on this continent at the moment is encapsulated by the phrase “responsible tax for the common good”,’ he says. ‘Also, given the increasing importance of taxes to government and businesses alike, one of the key challenges is building a pipeline of top talent interested in all aspects of tax, and which reflects the demographics of our country.’

Under his leadership, KPMG has focused on building an awareness of the increased significance of tax governance and tax risk and dispute management at boardroom level. ‘The processes, technology and data analytics needed in businesses to achieve this means we have had to innovate and engineer new solutions to assist.’

Duffield believes that CAs(SA) have the leadership, ethical, moral and people skills that are needed to make a difference in this country and on the continent.

The global tax [r]evolution

With an increasingly globalised and digitalised world, taxing rights between countries have become a hotly contested topic. It seems every country wants a bigger slice of the ‘profit pie’ from multinational enterprises operating in that country. By Nazrien Kader

In a slowing economy when tax collections decline below expectations, it is no wonder that the focus shifts to perceived erosion of the tax base. In recent months, base erosion and profit shifting (BEPS) has occupied the agenda of high-profile international bodies such as Oxfam, the Organisation for Economic Co-operation and Development (OECD), Action Aid and the African Tax Administration Forum (ATAF).

Fuelled by the perception that multinational enterprises, in particular, are sophisticated taxpayers who have access to the best tax brains in the world, revenue authorities seem to have adopted the mindset that multinational enterprises should be scrutinised, as a matter of course, to ensure that they pay what is due.

The council of ATAF seems to have taken on the role of communicating Africa’s position globally on the subject and mobilising resources across 36 countries on the continent of Africa to fight for the cause. More countries are likely to join ATAF so that their voices can be heard more clearly.

In the light of this changing tax landscape and the rapidly increasing tax ‘competition’ among jurisdictions, the role of regulators in helping to provide a stable framework within which businesses can operate effectively cannot be overemphasised. Until recently there has been a worrying divergence between countries when it comes to articulating tax policy and drawing up and implementing their respective tax legislation. This has created uncertainty for businesses trying to conduct trade across borders as efficiently and profitably as possible – but also opened up loopholes that can be exploited.

The new equilibrium in the global tax environment has resulted in actions on the part of policy-makers, regulators, revenue authorities and taxpayers that can be best described as the ‘Global Tax [r]Evolution’ – this in reference to topics such as the ‘responsible’ tax agenda, change in tax authorities’ approach to interpretation of existing tax law and tax treaties, unilateral tax law changes, and the OECD’s BEPS action plan. The timing of each of these challenges for businesses is increasing too and their impact permeates areas such as stakeholder engagement and brand protection, increased tax audits and adjustments, possible double taxation, increased complexity, and compliance.

Over the past five years, Deloitte has commissioned biennial research with global tax decision-makers in response to the changing global market dynamics. With over 1 000 organisations surveyed, Deloitte’s recent Global Multinational Survey found that 52% of organisations cite BEPS and OECD legislation as their biggest area of concern. And 93% of respondents agreed that media and political interest in tax in their country had increased while 74% said their organisations were concerned about increased media, political and activist group interest in tax.

It is clear that successfully navigating the new global tax environment is becoming riskier and more challenging for multinational enterprises that do not plan properly for all eventualities. Only those that develop strategies to respond to current and anticipated tax changes, assess and quantify tax risks so they can identify key focus areas and improve their stakeholder management, will be able to ensure they are not thrown off course.

No doubt an increase in cross-border trade is one of the best ways to ensure more stability for regional economies – but it cannot happen in isolation. A joint effort is needed, and then the desire to make it happen needs to be evident. In a significant move, the Commissioner of the South African Revenue Service (SARS), Tom Moyane,  in July this year facilitated a forum of tax commissioners from Botswana, Lesotho, Mozambique, Namibia, Swaziland and Zambia to discuss how these countries can work together to prevent tax base erosion and illicit tax outflows. Commissioner Moyane made it clear that a system that can automatically exchange information when cross-border deals take place will go a long way towards stamping out illicit trade.

Collective cross-border tax strategies between South Africa and its neighbouring countries are about to signal a paradigm shift in the way business is conducted in the sub-region. South Africa and its neighbours have realised that it is critical that they take joint action – where most of the cross-border trade takes place – to stamp out corruption.

The meeting of the forum culminated in a joint statement that makes some extremely important recommendations, and significantly lifts the level of tax rhetoric and commitment to change in Africa. Tom Moyane must be commended for starting the conversation together with his peers across the sub-region, who seem more willing than ever before to make changes that will improve tax certainty for the business world and tax collections. Incidentally, the next meeting of this body of tax commissioners is expected to be held in October 2015, within three months of the first meeting, which shows the commitment to this initiative. Multinational enterprises operating in these regions need to be prepared to reconsider the way they too regulate their tax and legal affairs.

A study of recent statistics in this regard highlights just how severe the problem has become.
The OECD last year released a study called ‘Illicit Financial Flows from Developing Countries: Measuring OECD Responses’. It was the first report to measure how well countries are performing in their fight against illicit financial flows. In the report the OECD says an estimated $1 trillion is paid each year in bribes and that reducing bribery reduces the opportunities for illicit gains, and hence illicit financial flows.

The International Monetary Fund recently released a working paper which said the cost of multinational enterprises deliberately avoiding tax exceeds $200 billion per year, and a report by the African Union on illicit financial flows said $60 billion was tapped from the African continent on an annual basis.
The increase in the tax and regulatory burden seems to continue unabated and multinational enterprises that can best navigate the changes brought about by the Global Tax [r]Evolution will continue to enjoy the rewards on offer on the continent. Those that do not will get lost in some very stormy waters.

AUTHOR | Nazrien Kader CA(SA) is Managing Partner for Deloitte Africa Taxation Services


Nazrien Kader joined Deloitte as a tax consultant in 1992. Today, she is Managing Partner for Deloitte Africa Taxation Services and is responsible for setting and driving the tax growth strategy across Africa.

Her role is to ensure that Deloitte invests in the appropriate skills, tax specialisation and tax technology platforms to deliver a seamless, quality service to its clients. Kader is also responsible for making sure that Deloitte is represented on the right platforms on matters of tax policy and practice.

‘With a slowing economy and nominal growth prospects, our challenge is to convince large multi-national enterprises to invest in quality tax reporting and compliance systems and dashboards,’ she says. ‘Tax reporting and compliance is as critically important as other forms of financial reporting. However, it’s not always easy to convince senior executives in non-financial roles that an investment in more real time tax reporting can help to curb other unnecessary investments.’

Under Nazrien’s  leadership, Deloitte Africa Tax has seen the integration of 15 countries in Africa under one member firm and the alignment of strategy, business priorities and culture counts as one of the achievements she is proudest of. In addition, navigating the South African fiscal and regulatory landscape has been a challenging yet rewarding journey for her.

The tax function of the future

Evolving trends are changing the way tax functions are operating – both day to day and with long-term strategic planning. With the advancement of technology, data and analytical capabilities, the tax function of the future will look surprisingly different from today’s, writes Paul de Chalain

Never before has tax been more important to governments, taxpayers and other stakeholders. The reputation and well-being of companies are also being affected by external perceptions of how companies manage their tax affairs. Companies can expect a greater focus on tax processes and control frameworks in future. Boards will be required to communicate their tax control frameworks in a much clearer and efficient way to a wider base of stakeholders than ever before, including not only tax authorities and governments, but also regulators, investors, non-governmental organisations (NGOs), the media and the public.

The tax function of the future is expected to undergo significant changes and will look substantially different from that of today. To remain relevant to the business, the tax function will need to chart a course for continuous transformation to enjoy the business benefit for years to come, being viewed less as a compliance centre function and more of a strategic asset for the company.

PwC has developed a series of thought leadership papers exploring our predictions for the tax function of the future, the challenges arising and how these need to be tackled by companies in the next three to five years. According to PwC, there will be six main areas affecting the tax function that will undergo radical change over the next three to five years: the global legislative and regulatory landscape; tax function’s role in risk management and governance; data flow into the tax function; technology automation for tax function’s analytical tasks; tax function roles and processes; and the required skills of the tax professional.

For the purposes of this article, we consider the current tax challenges, predictions for the tax function of the future, and how the current tax function will have to adapt to support and keep pace with the wider business.

Currently, five global megatrends are fundamentally changing the way businesses – including the tax function – operate. In particular, shifting global economic power, demographic changes and technological breakthroughs have already had an impact on the tax function.

They will continue to shape the tax function of the future alongside ongoing internal pressure such as operational and technological inefficiencies.

These global megatrends are impacting the tax function in a number of areas. These include, amongst others, compliance requirements, the audit approaches of tax authorities are changing, automation is becoming a necessity, business operating models are accelerating, tax is placing more reliance on financial reporting software, and big data and analytics are becoming of equal importance to tax.


The proposed country-by-country reporting (CbCR) in the Organisation for Economic Co-operation and Development’s (OECD’s) BEPS Action Plan represents a significant development for multinational companies. This proposed reporting will require more companies to account for information on the global allocation of profit, taxes paid and certain indicators of economic activity among the countries in which they operate (for example where their employees are located). CbCR is not the first transparency initiative, and it won’t be the last. However, what makes the CbCR requirements stand out is the breadth of their reach and impact on taxpayers, tax authorities, governments and even the general public. CbCR has raised the bar of transparency.


In the future, tax will need to provide assurances to the authorities and other stakeholders on the adequacy of the tax control (controls and process) framework it uses to manage tax risks. Also, the HRMS and the African Tax Organisation recently issued requirements and guidance on what they would like to see part of a company’s tax control framework. How tax delivers is becoming as important, if not more important, than what it delivers. Organisations that have met the challenges of the changing tax environment have recognised that the tax control framework and its components of governance, risk identification, internal controls, communication and monitoring are the key areas that must be modernised. If an organisation has clarity around its approach and management of tax, its tax strategy will be aligned with its business strategy, and this will assist in reducing reputational risk and tax disputes.

Strategic focus on jurisdictional reporting and documentation of business activities, as well as transfer pricing, will be critical to managing the increased tax controversy resulting from transparency initiatives.


Currently tax is one of the main consumers of data in an organisation, with virtually every transaction having a potential tax impact. Therefore, tax will need to take a leading role in defining their data requirements and potential solutions that is on par with the requirements of other parts of the organisations. In future the quality of data gathered from business operations will need to be significantly improved. Tax functions will also need to eliminate some of their ‘manual’ spreadsheet processes by centralising key data into a data hub or tax sensitising ERP systems.


Increasingly, more companies are expected to use their enterprise-wide financial systems (ERP) to prepare tax calculations (for example income tax accounting and indirect taxes) and in the process replace spreadsheets and traditional technology solutions. According to recent research carried out by PwC, CEOs globally see technology in the area of data and data analytics as the number 2 area to deliver high organisational value. A well-integrated tax data and analytics environment can assist tax accounting, indirect tax, transfer pricing, tax compliance and tax dispute resolution. Many companies have already invested in business intelligence tools and supporting data management technology.


There are a number of solutions available to companies to improve processes, enable new resources models, share information and enhance controls. Companies can tailor these technology solutions to achieve their goals and desired level of efficiency.


The successful tax professional of the future will need to focus more on the utilisation of data and technology. Organisations will be looking at transforming their operations with technology to automate and accelerate tax-planning opportunities and trends. As a result, tax professionals will need to be equipped with strategic risk management skills. Traditionally the ability to assess tax risk has been core skills, but this skill needs to evolve to include how tax risk is being managed across the business and how it aligns with the overall goals of the organisations.

During interviews, companies will look for these skills sets and increasingly encourage their staff to take advantage of training programmes to remain current.

The tax function cannot solve these many challenges with a one-dimensional approach. It will be necessary to take an integrated, holistic approach that is cross-functional, involving governance, data, technology, process and people. The critical first step will be to assess the tax functions; current capabilities in governance, data, technology, process and people.

Assessing the current state of the tax function against a tax function maturity model will also disclose the areas that may require strengthening. Depending on the outcomes of the current-state maturity level assessment, companies will need a transformation roadmap that addresses the processes and technology needs, together with the associated risk management objectives. It should be borne in mind that each company’s roadmap is unique and depends upon their current state as well as their expected future state of affairs.

It is not possible for the tax function to begin the transformation process without the collaboration and support of others within the organisation. To obtain this fundamental support, the tax function will need to ‘make a case’ as to why change is required. The creation of a robust control tax framework enables better identification and management of risks. The management of tax risk is increasingly rising on the C-suite agenda and the alignment of the tax control framework with the organisation’s wider control framework is likely to provide a strong argument for the tax function’s business case.

The need for change is certain, given the challenges tax functions are currently facing. Tax transformation will not be easy but it is imperative and the return on investment can be substantial.

AUTHOR | Paul de Chalain CA(SA) is Head of Tax Services at PwC Africa


PwC’s Head of Tax for Africa joined the company in 1980. Today, he runs its business across Africa.
Over the years he has learnt that its people, not strategy, that deliver results. ‘Our clients are the beneficiaries of a highly motivated and trained professional services team,’ he says.

De Chalain is not driven by personal achievements but by the contribution his profession makes to society. ‘Our purpose is to build trust and solve complex problems for clients. We do this every day by setting higher standards to meet the growing demands of a complex business world.’

He believes in taking ownership of one’s career. ‘Don’t think that someone else will look after you. Find a good coach and make yourself wanted in the workplace.’

What’s important to CAs(SA), he says, is understanding the tax function of the future. ‘Think governance, data, technology, tax transparency, risk management, process and people – all within the context of the global regulatory and legislative landscape.

‘It’s about understanding how global megatrends are impacting tax functions in many areas, including increasing compliance requirements, the changing approaches of tax authorities and aligning tax risk tolerance within corporate control frameworks.’

Tax administrative balancing act

The common thread running through the latest proposed changes to tax administration legislation is that SARS’ powers are again increased at the cost of legal certainty, making it increasingly difficult for taxpayers to protect their rights. By Christel van Wyk

The latest round of proposed tax administrative changes seems to tip once again the scales in favour of an already powerful tax administration and increases tax uncertainty by promoting the extension of time before tax issues prescribe. In this article some of these changes are highlighted which, in our view, increase the inequality between SARS and taxpayers. Furthermore, SARS has not balanced this proposal for increased time on their behalf with any mechanisms that provide increased tax certainty for the taxpayer.

Two important proposed changes stand out which seem to be the most glaring examples of injustice and inequality:

  • The proposal that SARS be given more time in exceptional circumstances to complete an audit, and
  • The proposal that in the case of a reduced assessment, a taxpayer must request the correction within six months and only in exceptional circumstances may be allowed a longer period not exceeding one year

The proposal by SARS for extending the time frame within which to conduct a tax audit to a period of up to six years will further serve to adversely affect legal certainty for a taxpayer. SARS explains the need for the change regarding complexity of tax affairs. It is trite that corporate tax matters are indeed complex, but what goes for the goose goes for the gander and where a taxpayer has limited time in which to compile and file tax returns, SARS already has either three or five years (depending on whether on self-assessment), and an indefinite period in the event of fraud, negligence, misrepresentation or non-disclosure, in which to assess and audit.

In the case where SARS seeks to apply the general anti-avoidance rule (GAAR) to resolve an information entitlement dispute or conduct a transfer pricing audit or investigation, it is proposed that SARS may seemingly unilaterally extend such time period by another three years. This does not seem to consider that when income tax is on a self-assessment system, in due course SARS will routinely have up to eight years to issue an additional assessment. A taxpayer with an active transfer pricing audit should therefore prepare for increased assessment risk of up to eight years and presumably report on this in its annual financial statements.

Where SARS notifies of the intention to apply the GAAR, the same applies and the level of uncertainty in planning ahead would become impossible to navigate. SARS may indicate the intention to apply the GAAR while the end result may prove to require a less invasive approach, yet the taxpayer would be required to supply full exposure for the full period. There are regrettably no remedies proposed to balance this process.

The key driver for the proposed extended timeframe for keeping an audit open is the level of complexity of the matter. Further practical issues arise around the definition of ‘complexity’ and the subjective manner in which the application of this extension provision is likely to be applied to just about any tax audit that doesn’t seem to be getting off the ground. This is likely to be applied in an arbitrary manner and may in itself lead to a further rise in tax disputes.

In the context where a taxpayer must routinely respond by lodging an objection to an assessment within 30 business days, on reasonable grounds within 51 business days and only in exceptional circumstances be granted a total of three years to defend itself, the latest proposals seem draconian and create significant imbalances. This raises important questions about the protection of fundamental rights such as the right to access to court in a free and democratic society. The proposed extension of the time frame by SARS further begs the question of legal certainty and finality.

The need for reducing the period within which a taxpayer must request a correction in terms of a request for reduced assessment is explained at the hand of perceived abuses and the attempt by taxpayers to bypass timeframes and procedures for objection. This observation simply does not seem to be logical. What the legislators need to understand is that there are valid reasons why a taxpayer should retain the right to make a routine correction within the full three- or five-year prescription period (depending on whether it is on a self-assessment basis or not) without having to request this based on exceptional circumstances. While the exceptional circumstances test in itself raises a number of fundamental constitutional questions, this is a separate topic for discussion altogether.

The practice around research and development allowances is a prime example of where the six-month period will be problematic. The pre-approval process requires that the taxpayer first obtain approval through the Department of Science and Technology (DST) and once this is received, the taxpayer may claim the incentive deduction for tax purposes. Considering the huge backlog in approvals from the DST, it is typical for the taxpayer to submit the request for correction very close to the three-year prescription deadline.

The current experience is that there is a backlog in pre-approvals of at least two years, which means that taxpayers need in excess of two years for such routine correction. The proposed amendments where the norm is six months simply do not take into account these practicalities.

In another example, a diligent corporate taxpayer would typically perform internal audits per the tax return submitted. Tax calculations for corporate taxpayers are highly complex in nature. It is a common occurrence that errors uncovered during this process are corrected through a reduced assessment request process.

The proposed amendment will serve to materially compromise the taxpayer’s position and will increase the likelihood of more tax disputes and are likely to intensify in complexity.

Unless due consideration is given to the effect of these proposals, taxpayers must prepare for a significant increase in their tax dispute resolution approach and strategy.

AUTHOR | Christel van Wyk is Tax Controversy Leader at Ernst & Young


James Deiotte is a certified public accountant (CPA), a certified management accountant (CMA) and an attorney. ‘I enjoy contributing to the strategic undertakings of our clients, which is why I strove for a broad-based skill set,’ he says. ‘In combination, these skills enable me to build teams that provide our clients with unique insights that many advisors cannot match.’

Having been with EY for nearly 20 years, today James is the firm’s regional tax leader for Africa. The practice comprises 30 countries in sub-Saharan Africa. Deiotte says demand for tax advice and compliance will continue to grow rapidly in Africa.

‘African nations are looking at ways to create greater trading efficiencies in the form of trading blocks to accelerate and increase commerce. Tax efficiencies, both direct and indirect, will be a big part of this effort. The challenge is attracting, training and retaining talent.’

His greatest satisfaction is supporting the growth and development of people. Bringing young people into the profession, challenging them, and mentoring and promoting them, has made his 35-year career truly satisfying.

On changes in the tax profession, he says economic, quantitative, analytical, human, IT and controversy experiences are just some of the new skills sets needed for the future.

Taking the lead in tax

Tax as a profession has become a large focus area within the broader accounting profession, adding additional regulatory complexity, but also extending opportunities for SAICA and its members
As the old saying goes, ‘In this world nothing can be said to be certain, except death and taxes.’

Tax is ever present in the minds of all, be it individuals, small business or multinational companies.
Annual complex tax amendments continue to come in thick and fast, coupled with the increasing global focus on regulation of the tax profession, international information exchange, and transfer pricing. Tax administration in South Africa is no doubt one of the major issues that keep members up at night.

SAICA remains a leader in tax and in this issue of Accountancy SA we profile the members of the SAICA National Tax Committee and the Integritax panel who are instrumental in SAICA influencing legislation in South Africa for the benefit of society at large and in educating members to equip them to be tax leaders in their own right. In addition to having full-time jobs, the members of the National Tax Committee and Integritax voluntarily give of their time and expertise to serve the members of SAICA and contribute to the profession as a whole. For that we are all extremely grateful.

However, tax is an ever-changing environment and to look into the crystal ball, we profile the Heads of Tax of the Big 5 accounting firms to give their insights and views, looking at their concerns in light of the current challenges and those on the horizon. The Accountancy SA team appreciate the time and effort dedicated to this month’s issue, despite the busy schedules of these tax leaders.


Integritax, SAICA’s monthly tax journal, came about as a result of the efforts of the first Projector Director: Tax, the late Len Norval, together with Graham Richardson and Ken Mockler. The tax technical publication was launched just over 31 years ago and continues to be popular among members.
The six-member panel chaired by Kent Karro is responsible for selecting and editing the content for the publication – from the newsletters of firms in public practice and commerce and industry, as well as other contributors – to ensure that only the most relevant, high-quality articles are provided. The panel is also responsible for setting CPD questions. SAICA members can attain up to ten hours of CPD as a result of the efforts of this panel.

As part of SAICA’s ongoing efforts to improve its offering to members, Integritax has recently been launched in a new Digimag format and members may look forward to further changes to the content of the publication in 2016.


Kent Karro CA(SA)

Kent is a director of Horwath Taxation (Cape) (Pty) Ltd. He is the chairperson of Integritax, of which he has been a member for 21 years. He is an honorary life member of SAICA and a former chair of its National Tax Committee.

Kent specialises in the South African tax system including income tax, VAT, capital gains tax, estate duty and donations tax – and in particular how these taxes affect both South African residents and non-residents. He also deals with South African exchange control regulations as they apply to residents, non-residents, emigrants and immigrants, and advises on estate planning.

Kent is the chair of the Editorial Panel of Integritax and a member of the regional tax committee in the Southern Region of SAICA. He is a member of the South African Institute of Professional Accountants and former member of its National Tax Committee. Kent is a member of the Crowe Horwath International Europe, Middle East and Africa Tax Committee (EMEA region) and is also the editor of the quarterly Crowe Horwath African newsletter.

Dr Beric Croome CA(SA)

Beric is an advocate and tax executive at Edward Nathan Sonnenbergs. He received his PhD from the University of Cape Town for a thesis on taxpayers’ rights that won the doctoral category of the Deneys Reitz tax thesis competition. His thesis was published by Juta under the title Taxpayers’ Rights in South Africa. He co-authored Tax Administration with Professor Lynette Olivier and is the managing editor of Tax Law: An Introduction, which are both published by Juta. Beric is the former chairperson of the National Tax Committee of SAICA and in 2013 was appointed as chair of SAICA’s Tax Administration Act subcommittee. He is the South African branch reporter for the International Fiscal Association Basel 2015 Congress on ‘The Protection of Taxpayers’ Fundamental Rights’ and participated on a panel for that congress dealing with the protection of taxpayers’ rights. His particular interests are taxpayers’ rights, dispute resolution, trusts, and income tax generally. He has been a member of Integritax for 12 years.

Afzal Khan CA(SA)

Afzal Khan completed his traineeship at PricewaterhouseCoopers, where he worked in the internal audit, tax and corporate finance divisions. Moving to Cape Town, Afzal accepted a position at SARS Special Investigations. On completion of his SARS contract, he formed a new practice called RAFT with like-minded individuals. Prior to his SAICA involvement, Afzal has been involved in the Association for the Advancement of Black Accountants of Southern Africa (ABASA). Afzal has sat on SAICA committees for the past ten years. He is currently chairperson of the National Small and Medium Practices Committee and sits on the Integritax Editorial Panel. He has been a member of Integritax for 14 years.

Zwelodumo Mabhoza CA(SA)

Zweli is the founder of Priority Tax Solutions. Previously he was Head of Tax at SNG and was also a tax partner at Deloitte. He has provided tax advice to a number of clients on restructuring and acquisition transactions and has been a member of SAICA’s National Tax Committee for nine years. Zweli has written a number of articles on tax-related matters and has been requested by the media to comment on draft legislation and budget proposals. He is currently a member of the SAICA Examination Committee and Integritax Committee, and is a Tax Court assessor. He has previously presented as a guest lecturer in Tax at various universities and is also a panel member of the Appeal Board at the Financial Services Board (FSB). He has been a member of Integritax for a year.

Martie Foster CA(SA)

Martie Foster specialises in corporate tax. She has been an independent tax practitioner for more than 20 years and is a senior lecturer in the Department of Finance and Tax at the University of Cape Town. Martie currently serves on the SAICA National Tax Committee, the SAICA Southern Region Tax Committee, and the Editorial Panel of Integritax. She is also a member of the Audit Committee Forum Working Group, a joint initiative of the Institute of Directors of Southern Africa and KPMG. Martie served and completed her articles at Deloitte. She gained commercial experience as tax and treasury manager at Columbus Stainless and was the tax manager at SABMiller before she moved to Ernst & Young as tax consultant. She joined Mallinicks, a firm of attorneys in Cape Town, in 2005 and following a merger between Mallinicks and Webber Wentzel Bowens, was with Webber Wentzel until mid-2012. She is currently a member of Corporate Law Alliance, an independent association of attorneys and advisors. She has been a member of Integritax for one year.

Professor Jennifer Roeleveld CA(SA)

Jennifer is a Professor of Tax in the Faculty of Commerce at the University of Cape Town where she is the head of the MCom SA Tax and MCom International Tax programmes. She has published locally and internationally in books and journals. She is a contributing author to Juta’s Income Tax (SA), Bloomberg BNA (USA), and the IBFD Global Tax Treaty Commentary. She is the South African team leader for Sustainable Tax Governance in Developing Countries through Global Tax Transparency (DeSTaT), comprising seven countries. She is the president of the International Fiscal Association (IFA) South Africa and is a member of the Permanent Scientific Committee of IFA worldwide. Jennifer was a member of the National Tax Committee of SAICA until June 2015, and she regularly presents at conferences both locally and abroad. Her specific interests are exchange of information, TIEAs, DTAs, and capital transfer taxes. She has been a member of Integritax for 16 years.

Professor Kevin Mitchell CA(SA)

Kevin is the founder and a director of Mitchells Tax Consultants Company (Pty) Ltd where he specialises in tax and estate planning. He is co-author (with his brother Lindsay) of Graded Questions on Income Tax in South Africa’ (LexisNexis), which is now in its 36th edition. For over two decades, together with Lindsay, Kevin has presented an annual tax update seminar on behalf of SAICA and other organisations. Kevin has served on SAICA’s Taxation Committee and the PAAB’s Education Requirements Committee. He moderated SAICA’s Special Examination in the Law of the Republic for 26 consecutive years. The Association of Law Societies awarded him a special certificate in recognition of 20 years’ contribution to the training of attorneys. Kevin was appointed by the Minister of Finance to serve on the Sales Tax Advisory Committee and by the State President to serve as a member of the Special Court for Hearing Income Tax Appeals. He was appointed an Honorary Professor of Law at the University of KwaZulu-Natal. He has been a member of Integritax for 21 years.

Professor Peter Surtees CA(SA)

Peter obtained his MCom in Taxation from Rhodes in 1985. He was a partner in a firm of chartered accountants until joining the staff of the Department of Accounting at Rhodes University in 1980, where he rose to the position of head of department. After retiring he was appointed to the newly formed tax division of Deneys Reitz Attorneys, now Norton Rose Fulbright, where he is currently a director in the Tax Division. He was awarded a certificate of commendation for outstanding contributions to accounting education at a University of Natal graduation ceremony in June 1999. The award recognises his contributions over two decades at Rhodes University, as well as his present teaching at UCT. In 2013 he was appointed Extraordinary Professor in the Department of Taxation at the University of Pretoria. Peter writes widely on tax-related topics nationally and internationally and presents the MCom (Taxation) course at UCT. He has been a member of the Tax Court since 2007 and has been a member of Integritax for 16 years.


The SAICA National Tax Committee is the official tax technical and advisory body of SAICA. Its primary role is to advise the SAICA Executive Committee and implement strategic tax matters that affect the membership, the tax profession, and society at large.

Together with the SAICA Tax Division, the National Tax Committee is responsible for commenting on and providing the final position on proposed changes in tax legislation, guides and interpretation, via written submissions and oral presentations. To fulfil this function, the committee regularly reviews and monitors tax legislation and practice and engages in research in tax policy to stay abreast of developments both in South Africa and abroad.

The committee promotes and supports, among members, a culture of full and proper disclosure of information to SARS, as well as compliance and morality within tax legislation. This is becoming even more relevant in light of the increasing regulation of the tax profession globally and SAICA’s irreproachable adherence to standards of integrity. Furthermore, the committee acts as an independent intermediary between SAICA members and the relevant fiscal authorities and legislature to resolve matters of concern for both legislative and operational matters. In this regard, it remains imperative that in these engagements, professional relationships based on a spirit of collaboration are maintained at all times.

Owing to the increasing complexity and number of taxes, various subcommittees of the committee have been created over the years to utilise the leading specialists in each field for the benefit of the profession.

These include specialist committees in tax operations, VAT and customs, transfer pricing, tax policy, employees’ tax, and share schemes.


Professor Osman Mollagee CA(SA)

Osman Mollagee is a partner at PwC and an associate professor at the University of the Western Cape, and is chair of the National Tax Committee, having been a member for nine years. Osman has specialised in tax for over two decades, mainly in the corporate and international structuring and consulting environment. At PwC Africa, Osman is a partner in the International Tax Services Network and is the leader of the PwC’s Johannesburg International Tax team. In addition to his past experience in international tax consulting (including four years with PwC London), Osman’s previous roles span several other areas of taxation – having served as a dedicated tax technical resource and head of tax technical training at PwC and having also spent five years in full-time academia. He advises many multinational groups and is a core member of PwC’s Legislative Monitoring and Lobbying team, interacting with National Treasury, Parliament and SARS on legislative developments. Osman is also the chair of the Tax Policy Subcommittee at SAICA.

Tracy Brophy CA(SA)

Tracy is an admitted attorney and currently the Head of Tax Risk Management at FirstRand Bank Ltd, where she has been employed for the past 11 years. She has been a member of the National Tax Committee for nine years and is currently the deputy chair of the committee. She represents FirstRand at the Banking Association of South Africa’s (BASA’s) Direct Tax Committee and is responsible for the preparation and collation of this committee’s comments to SARS, National Treasury and the Davis Tax Committee in relation to business and international tax matters affecting the banking industry in South Africa. She also represented BASA at the public hearings before the Standing Portfolio Committee on Finance in Parliament in 2013 and 2014.

Her specific interests are international tax, transfer pricing and BEPS, as well as legislative tax amendments impacting the banking industry.

Eric Berman CA(SA)

Eric is a registered tax practitioner in a medium-sized accounting and tax practice. He has gained extensive knowledge and experience in various sized companies in numerous industries. He has served on large clients’ internal finance committees and serves as a trustee on several trusts that have large amounts of funds under management.

He has acted as executor of numerous estates, both large and small, and has a wide knowledge and experience of corporate and personal tax.

He has been a member of the SAICA National and Northern Region Tax Committees since January 2014 and represents SAICA at the SARS National Stakeholders’ Forum, which meets quarterly with SARS head office officials in Pretoria.

He also represents SAICA at the SARS Region 1 meetings held quarterly with all the branch managers of the SARS branches in Gauteng.

Zwelodumo Mabhoza CA(SA)

Zweli has been a member of the National Tax Committee for eight years. He is also a member of Integritax (see above).

Martie Foster CA(SA)

Martie has been a member of the National Tax Committee for eight years. She is also a member of Integritax (see above).

Suren Dharamlall CA(SA)

Suren has 15 years’ experience as a tax specialist. He holds a BCom degree, a Higher Diploma in Accounting, and a Mining Tax Certificate.

He currently heads up the Business Taxes Group in South Africa having previously headed up the Mining Taxes Group, which now falls under Business Taxes. He is a registered tax practitioner in South Africa and has consulted to a broad range of clients including clients in the aviation, mining, manufacturing, services, and private equity industries.

He has been a member of the National Tax Committee for two years.

Christo Landman CA(SA)

Christo is currently the Group Executive: Group Tax at Liberty Holdings Limited. He has been with the Liberty Group since 2004 and is responsible for managing tax for the entire Liberty Group. In his executive role he is responsible for providing advice, opinions and technical support in all areas of tax, specialising in financial services taxation, international tax, capital gains tax, mergers and acquisitions and transfer pricing. He started his career at PricewaterhouseCoopers, where he was transferred to the Tax Department after completing his articles. He was admitted as a tax partner, responsible for the insurance taxation practice.

Christo has represented Commerce and Industry (Insurance sector) on the SAICA National Tax Committee for almost eight years now and is also a member of the Association of Savings and Investment of South Africa (ASISA) and BUSA tax standing committees.

Justin Liebenberg CA(SA)

Justin is a CA(SA) with a BCom LLB and higher diplomas in tax and international tax. He held tax leadership positions at a large accounting and law firm before joining EY as the International Tax and Transfer Pricing Leader for Africa. Apart from leading the EY team and serving clients, Justin is a regular presenter on international tax issues at conferences locally and abroad. He is passionate about tax and has a particular interest in international tax-related matters. He has been a member of the National Tax Committee for three years.

Kyle Mandy CA(SA)

Kyle is a partner and head of National Tax Technical at PwC South Africa. As part of that role, he is responsible for formulating PwC’s position on matters of tax policy and tax design. He works closely with National Treasury, the Davis Tax Committee and the South African Revenue Service in this regard and presents PwC’s views to Parliament. He is also a member of the PwC global tax policy network and the Global Sustainability and Climate Change tax network. Kyle has twenty years’ experience in tax and has led the National Tax Technical practice since 2009. He has played an active role in the development of tax policy and design in South Africa. Aside from working with government, he has had numerous interactions with international organisations such as the World Bank and IMF on matters of tax policy.

He is also a member of the Tax Policy and Tax Administration subcommittees and the BUSA tax subcommittee. He has been a member of the National Tax Committee for two years.

Brian Payne CA(SA)

Brian qualified as a CA(SA) in 1991 and served his articles at PwC (previously Coopers & Lybrand). He subsequently joined SARS. During this period he completed a postgraduate Diploma in Taxation. From 1997 to 2008 he worked in the Taxation Business Unit of KPMG in both the Durban and Johannesburg offices. Before leaving the employ of the company he was in charge of the tax department in KwaZulu-Natal, a position he held for eight years. Brian joined the tax team of Ernst & Young (EY) on 1 May 2008 as an associate director. He held this position to 31 August 2010 when he left to form his own tax practice. Brian is the chairperson of SAICA Eastern Region’s Tax Committee and a member of SAICA’ Eastern Region Council. Brian has served on the National Tax Committee since 2009 and is currently the external examiner at UKZN for the Advanced Taxation course.

Cicelia Potgieter CA(SA)

Cicelia is currently the Head of Tax for the Barloworld Group. She has been with the group since 2001, with a short break of three years as the Taxation programme manager at North-West University. She started her career as an article clerk at Deloitte’s Pretoria office and left Deloitte as a senior manager in the transfer pricing department after a brief stint in London. At Barloworld, she is responsible for managing tax for the entire group, including providing advice, opinions and technical support in all areas of tax, specialising in international tax, capital gains tax, mergers and acquisitions and transfer pricing. She also runs the Barloworld Tax School. Cecilia has represented commerce and industry on the National Tax Committee for almost nine years now and has contributed articles to the Financial Mail, Accountancy SA and the Tax Suite Journal.

Elizabeth Lombaard CA(SA)

Elizabeth is a registered tax practitioner. She is an associate director in KPMG’s Cape Town Tax Department and advises her clients on international and corporate tax matters. She has been working in the professional sector since 2000 and regularly presents technical tax updates to clients. Of particular interest to her is the management of tax risks. Elizabeth has been a member of the National Tax Committee since January 2015.

Colin Wolfsohn CA(SA)

Colin is a registered auditor. After 18 years as the tax partner of a large accounting firm, he decided to leave the large corporate world and start his own practice and has been a sole practitioner for the past 11 years. He has extensive experience in taxation and heads the liaison with SARS on behalf of SAICA. He has been the chairperson of SAICA Southern Region’s Taxation Committee (since 1994) and a member of SAICA’s National Tax Committee (1996–1999 and 2003 to date), and he also chaired the Cape Town tax discussion group (1992–2010).

Colin was also president of SAICA’s Southern Region, during which time he sat on the SAICA board.

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