South Africa updates

Corporate Tax

Contributed by Cliffe Dekker Hofmeyr
Timing of tax on gift cards
  • South Africa
  • 31 May 2019

The Cape Town Tax Court recently addressed the timing of income tax in relation to retailer gift cards. The court found that a taxpayer had been correct to have included its receipts for unredeemed gift cards as part of its gross income before the Consumer Protection Act came into force. During the case, the counsel for the commissioner of the South African Revenue Service raised an interesting argument – namely, that the act was introduced to protect consumers' rights and not to change the incidence of tax.

Further amendments to VAT e-services regulations enter into force
  • South Africa
  • 24 May 2019

Revised regulations clarifying the e-services supplied by foreign suppliers to South African consumers which are subject to value added tax were proposed in 2018, which significantly broadened the scope of e-services. In the 2019 Budget Review, the minister of finance announced that further amendments would be made to the e-services regulations to address certain oversights. The regulations came into effect on 1 April 2019.

Preference share funding structures: overview of Companies Act and Income Tax Act provisions
  • South Africa
  • 17 May 2019

Preference share funding structures are often preferred by banks and other financial institutions because dividends received by certain holders – including banks and other juristic persons – are exempt from income tax. As such, the provisions of the Companies Act and the Income Tax Act must be considered in the context of the outcome which a company wishes to achieve before it settles the terms of a preference share funding structure.

Creature of statute: decision about Tax Court's power to increase understatement penalties
  • South Africa
  • 10 May 2019

The Supreme Court of Appeal recently ruled on the South African Revenue Service's (SARS's) right to impose understatement penalties on a taxpayer and the quantum thereof. The judgment will be welcomed by taxpayers involved in disputes with SARS regarding understatement penalties, as it reaffirms that the Tax Court cannot, of its own volition, increase an understatement penalty.

Proposed amendments regarding dividend stripping rules in 2019 Budget: further reflection
  • South Africa
  • 03 May 2019

This article delves into the National Treasury's proposal to address abusive arrangements aimed at avoiding the anti-dividend stripping provisions in the Income Tax Act. It first discusses the history of the amendments, followed by an examination of the anti-dividend stripping provisions and a brief discussion of the National Treasury's proposal in the 2019 Budget.


Environment & Climate Change

National Biodiversity Economy Strategy: opportunities for innovation and investment
  • South Africa
  • 11 February 2019

In October 2018 the draft National Biodiversity Framework (NBF) was published for public comment. Considering that South Africa is the third most biodiverse country in the world, the government, as custodian of the country's biodiversity, has implemented approximately 30 national strategies, frameworks and systems in the biodiversity sector. The NBF's purpose is to coordinate and align the efforts of the many organisations and persons involved in the complex interplay between these strategies.


Healthcare & Life Sciences

Contributed by ENSafrica
New breeding techniques and regulation of genetically modified organisms
  • South Africa
  • 15 May 2019

A recent European Court of Justice ruling on the status of organisms obtained by new breeding techniques as genetically modified organisms (GMOs) has again brought the scope of the South African GMOs Act into question. The difficulty with regulating organisms created through such techniques is that these organisms may be indistinguishable from organisms which have naturally evolved.

Medical cannabis: growing pot-ential
  • South Africa
  • 05 December 2018

Cannabis has enjoyed heightened attention following a recent ruling decriminalising the private possession, consumption and cultivation of the plant for recreational purposes. While there have been several positive developments in the promotion of the medical cannabis market in South Africa, the overarching regulatory framework and authorities' current practice remain barriers to entry for prospective local players in the medical cannabis product manufacturing market.

Bioprospecting and biotrade requirements
  • South Africa
  • 03 October 2018

The Biodiversity Act regulates bioprospecting on and biotrade with indigenous biological resources and indigenous genetic resources and the use of traditional knowledge. Although the early years of regulation under the act were stormy and there was much confusion over who needed to apply for permits and what was required from applicants, there is now more certainty as to what is required.

Ownership of genetic information and tissue under National Health Act
  • South Africa
  • 08 August 2018

The legal and philosophical issues relating to the concept of ownership of various kinds of human biological material has been hotly debated. This is an emotive topic that requires balancing societal and commercial interests with individuals' rights, such as the constitutional right to bodily and psychological integrity, which includes the right not to be subjected to medical research or scientific experiments without giving informed consent.

Focus on healthcare and life sciences legislation: Genetically Modified Organisms Act
  • South Africa
  • 06 June 2018

The Genetically Modified Organisms (GMO) Act provides the requirements to ensure the responsible development, production, use and application of GMOs. Any entity or person planning to perform a regulated activity under the act must prepare an application to the registrar and pay the application fee. Regulated activities include activities involving genetic modification, the experimental or trial release of a GMO, the contained use of a GMO and the general release of or commodity clearance regarding a GMO.


Intellectual Property

Contributed by KISCH IP
Who can apply for a patent? Applicant versus inventor
  • South Africa
  • 10 June 2019

A granted patent is a highly lucrative commercial tool in the hands of the patent applicant. However, inventors are not necessarily entitled to apply for a patent, especially in employment contexts. Inventors are therefore advised to consult with a patent attorney when they are uncertain whether an invention falls within the scope and course of their employment. It is further advisable to enter into negotiations with employers regarding compensation for the invention.

Patenting strategy: when to patent?
  • South Africa
  • 03 June 2019

Patenting inventions is notoriously expensive; however, the benefits of having exclusive rights over an invention far exceed any initial patenting costs. The problem remains that a decision on whether to patent an invention must often be made long before the invention's commercial potential can be judged. As such, it is often difficult to know what to patent.

Overview of registered designs: what you need to know
  • South Africa
  • 27 May 2019

The Designs Act (195/1993) gives the proprietor of a registered design control over it for a limited period. This control is not aimed at protecting an underlying concept, but rather at the appearance of a product embodying the design. This article discusses (among other things) proprietor rights, the difference between aesthetic and functional designs and the costs involved in registering a design.

How a 'House of Bonang' can house its intellectual property
  • South Africa
  • 20 May 2019

Many celebrities extend their brands by venturing into various industries, such as Bonang Matheba who recently launched her own range of sparkling wine. While these endeavours can work well, they also create opportunities for individuals to infringe on the IP rights embedded in celebrities' respective ventures. As such, there are a number of IP rights that celebrities can use to maintain control over their brands and regulate how they are used by others.

How to protect new plant varieties
  • South Africa
  • 13 May 2019

South Africa has no plant patent system, as the Patents Act states that a patent will not be granted for any variety of plant. Therefore, new plant varieties are protected exclusively under the Plant Breeders' Rights Act. However, genetically modified plants could be patentable subject matter under the Patents Act, as they are not strictly classed as new varieties of plant.


Real Estate

Clarification in SARS' latest issue of Interpretation Note 64
Cliffe Dekker Hofmeyr
  • South Africa
  • 11 January 2019

The South African Revenue Service recently published the fourth issue of Interpretation Note 64, which seeks to provide guidance on the application and interpretation of Section 10(1)(e) of the Income Tax Act. With the rising prevalence of complex developments, security estates, shopping centres, wellness compounds and high-rise flats in South Africa, body corporates, homeowners' associations and share block companies are commonplace and clear guidelines as to the taxation of these entities is imperative.

Residential property developers face cash-flow crunch due to VAT on temporary letting of units
  • South Africa
  • 06 April 2018

Many residential property developers will begin 2018 with a major cash-flow challenge, as they may be faced with a substantial value added tax (VAT) liability in respect of the temporary letting of residential units which have been developed for resale. It is hoped that the South African Revenue Service and the National Treasury will urgently address the problems with regard to the VAT rules concerning the change-in-use adjustments for property developers.