South Africa updates

Corporate Tax

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
Potential for lucrative cannabis industry in South Africa
  • South Africa
  • 12 February 2020

There have been a number of key developments in South African life sciences law relating to cannabis in recent years, including amendments to the Medicines and Related Substances Act 1965, such that products which contain only cannabidiol – when intended for therapeutic purposes – can now be obtained from a pharmacist by prescription. Further, cannabis-related trademark applications will now be accepted on the condition that the products comply with the standards set by the health minister.

It all hinges on 2026 – will we be prepared for national health insurance?
  • South Africa
  • 06 November 2019

The National Health Insurance (NHI) scheme, which is set to come into force on 1 January 2026, will centralise the purchasing of healthcare services in a single body established by the government: the National Health Insurance Fund. The proposed link between the NHI scheme's full implementation and the arbitrary date of 1 January 2026 may be irrational considering the risk of the requisite infrastructure not being sufficiently in place by such date.

Bolar provisions for generic and biosimilar medicines
  • South Africa
  • 14 August 2019

South Africa is in the process of reviewing all existing IP laws, particularly in the context of access to medicines. It appears that the type of changes to be made in respect of the Bolar exception will relate to whether the narrow exception should be extended and, if so, to what. In particular, it is likely that an early experimental research exclusion will be included, such as for pre-clinical research. It remains to be seen whether South Africa's laws may change to allow stockpiling of generic medicines.

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.


Intellectual Property

Contributed by KISCH IP
Patent rights for vaccines and research against COVID-19
  • South Africa
  • 04 May 2020

As the COVID-19 pandemic spreads across the globe, companies are scrambling to find a cure and be the first to own patent rights to a vaccine against the virus. In South Africa, the Patents Act does not define an invention but rather lists a number of exclusions as to what could constitute a patentable invention. In particular, the act specifies that a scientific discovery is not an invention, which raises the question of whether the genetic sequence of COVID-19 could be patented in South Africa.

Copyright infringement and reverse engineering of computer programs
  • South Africa
  • 13 April 2020

The Copyright Act defines a 'computer program' as a set of instructions fixed or stored in any manner and which, when used directly in a computer, directs its operation to bring about a result. From this definition, it is apparent that source code forms the subject matter of copyright protection as a computer program. However, the owner of the copyright in a computer program cannot object if a third party mimics the functionality of the computer program, provided that the third party had no access to its source code.

Conditional acceptance of trademark applications
  • South Africa
  • 17 February 2020

Trademark applications are examined by the Office of the Registrar of Trademarks approximately eight to 10 months after their date of application. This article discusses several possible conditions that examiners often prescribe for accepting trademark applications and which applicants must therefore consider before filing.

Relationship between cannabis and trademark law
  • South Africa
  • 25 November 2019

A trademark will not be registered, or can be removed from the register, if it is inherently deceptive or likely to deceive or cause confusion, contrary to law, against good morals or likely to offend anyone. This article provides insight into the contrary to law provision, particularly insofar as it relates to the controversial discussion regarding the partial legalisation of cannabis in South Africa and its impact on trademark law.

The power of part marks
  • South Africa
  • 11 November 2019

Copycat products imported into South Africa often replicate well-known brands. In such cases, an analysis must be undertaken to determine whether the owner of the legitimate well-known brand can sue based on various grounds. In this respect, although word marks are often seen as the most important because they are a brand's primary name, from an enforceability perspective, filing a part mark can help to avoid ambiguity.


Real Estate

Clarification in SARS' latest issue of Interpretation Note 64
  • 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.