In a recent case, IBM Malaysia applied for an advance ruling from the director general of inland revenue (DGIR) to determine whether a payment made by it to IBM Ireland under a software distribution agreement would be considered royalty under the Income Tax Act and thus subject to withholding tax. One of the issues raised by the DGIR for consideration by the court was whether the advance ruling was a decision amenable to judicial review.
In deciding whether to invest abroad and which country to invest in, taxpayers will usually consider whether South Africa has a double tax agreement with that country. However, taxpayers should also ensure that they comply with South Africa's exchange control rules when making an offshore investment. One of the biggest pitfalls to avoid in this regard is the creation of a loop structure, which is considered to be a serious contravention of these rules.