South Africa updates

Corporate Tax

Contributed by Cliffe Dekker Hofmeyr
SARS speaks up: clarity provided on taxation of cryptocurrencies
  • South Africa
  • May 25 2018

The South African Revenue Service (SARS) recently announced that it will continue to apply normal income tax rules to cryptocurrencies and expects affected taxpayers to declare cryptocurrency gains or losses as part of their taxable income. Due to the growing popularity of cryptocurrencies in South Africa and the absence of legislation concerning their taxation and regulation, SARS's decision to address this issue was widely anticipated.

Tax treatment of doubtful debts to be clarified through statutory amendments
  • South Africa
  • May 18 2018

In line with the removal of the remnants of the administrative assessment system in 2015, the South African Revenue Services commissioner's discretion in respect of the doubtful debt allowance was to be deleted from the Income Tax Act. The intention behind this deletion was that, in future, the allowance would be claimed according to certain criteria set out in a public notice. However, according to the recent budget, it is now proposed that the criteria for determining the allowance be included in the act.

Tax rate adjustments
  • South Africa
  • May 11 2018

​Although an increase of 1% in the value added tax rate was announced in the budget in February 2018, no adjustments have been made to the top four income tax brackets. Rather, below-inflation adjustments to the bottom three income tax brackets were announced. It was also announced that the primary, secondary and tertiary rebates will be partially adjusted to account for inflation.

VAT increase: what rate should be charged?
  • South Africa
  • May 04 2018

The minister of finance recently announced that the standard rate of value added tax (VAT) will increase from the current rate of 14% to 15% from April 2018. Unfortunately, the date of introduction of the new rate leaves vendors little time to amend their systems and implement procedures to ensure that VAT is correctly accounted for from that date. There is also uncertainty as to when supplies still qualify for VAT at 14% and when VAT should be levied at 15%.

SARS issues new Guide to Understatement Penalties – a move towards greater certainty?
  • South Africa
  • April 27 2018

One of the key changes to the tax administration regime following the Tax Administration Act's promulgation in 2012 was the conversion from the so-called 'additional tax' regime to the understatement penalty regime. While this shift towards greater certainty has been welcomed, a key challenge remains as the new regime's criteria are open to differing interpretations. In this regard, the South African Revenue Service recently published its Guide to Understatement Penalties.


Healthcare & Life Sciences

Contributed by ENSafrica
Biopharming: new frontier for affordable medicines
  • South Africa
  • April 11 2018

The South African government has focused on biopharming as a means of developing the bioeconomy for more than a decade. In addition, different government departments have already implemented legislation concerning plant-based protein production. Given this infrastructure and the highly active local biopharming research community, South Africa is considered a promising jurisdiction for the production of plant-based therapeutic proteins, with many possible opportunities for investment and collaboration.

Medical products: incentives regulation reloaded
  • South Africa
  • February 14 2018

The South African minister of health has called for public comment on the recently published Draft General Regulations Relating to Bonusing. The draft regulations aim to flesh out Section 18A of the Medicines Act, which prohibits the supply of any medicine, medical device or in vitro diagnostic medical device that is subject to a bonus system, rebate system or any other incentive scheme.

Draft IP Policy Phase 1 – part two: access to medicines, state 'walk-in' rights and parallel import
  • South Africa
  • December 06 2017

The recently published Draft IP Policy Phase 1 2017 includes a number of provisions relating to parallel import and state 'walk-in' rights for access to affordable medicines. Although there are complex issues surrounding access to affordable medicines, the inclusive process that the government has used in the implementation of the new policy is encouraging.

Draft IP Policy Phase 1: access to medicines and compulsory licensing
  • South Africa
  • October 11 2017

The keenly anticipated draft IP Policy Phase 1 (2017) was recently published for public comment. It constitutes the first phase in the implementation of a comprehensive IP policy for South Africa. One of the key issues to be addressed is the interplay between the constitutional rights relating to property and access to healthcare. According to the policy, the scope of compulsory licences will be strengthened and clarified in an effort to facilitate the process of exporting IP goods, such as medicines.

Doctrine of equivalents and pharmaceutical patent infringement
  • South Africa
  • August 09 2017

South African pharmaceutical product litigation case law provides no particular test that refers to the doctrine of equivalents. However, when interpreting the scope of patent claims, the courts may hold that a claim extends to obviously substituted equivalents in the infringing product or process that are not literally provided for in the specification and claims. As such, a pharmaceutical product or process with chemical equivalents may also be considered to constitute infringement.


Intellectual Property

Contributed by KISCH IP
When is a descriptive mark not a descriptive mark?
  • South Africa
  • May 07 2018

In a recent appeal against a decision to uphold an opposition against the registration of the trademark PEPPAMATES in view of the registered trademark PEPPADEW, the Supreme Court of Appeal had to consider when a descriptive mark is not a descriptive mark. The Supreme Court of Appeal's judgment has confirmed that where the prefix or first element of a word is in common use, the suffix or last element can be the distinctive element for trademark purposes.

Stay app-dated
  • South Africa
  • January 29 2018

Apps have become increasingly popular owing to users' desire to stay in touch with rapidly developing technology-driven content and services dissemination. They have been created to satisfy just about any need, from gaming to fitness, transport to live updates and shopping to socialising – whatever you require is out there at the tap of a button. However, before releasing an app, IP considerations must be taken into account.

Who owns the copyright in your joint database?
  • South Africa
  • January 22 2018

The Johannesburg High Court recently had to decide whether transacting parties shared joint ownership of the copyright subsisting in a database of donors for a charity event organised by one of the parties. This case should have IP owners questioning where the ownership in the copyright subsisting in any original and protectable work that has arisen in the course of a partnership or joint venture truly lies.

Online shoppers beware – don't let your bytes bite back!
  • South Africa
  • October 30 2017

As online consumer confidence grows in South Africa, the online market is becoming an increasingly attractive space for counterfeiters and fraudsters. Counterfeiting not only affects consumers and brand owners, but can also weaken a country's economy and impact its ability to attract foreign investment. However, consumers have the antidote to counterfeiting and, as such, must make sure to use it.

Is there any craft in your craft beer?
  • South Africa
  • October 02 2017

In recent years, the South African craft beer industry has grown rapidly. Larger commercial beer companies have been heavily affected by this shift in the market and have thus started to acquire craft breweries. In order to prevent the term 'craft beer' from becoming diluted in the near future, many remaining craft breweries feel that the market should be completely transparent. As such, it is surely only a matter of time before South Africa adopts a certification process to protect the nature of 'true' craft beer.


Media, Marketing, Sports & Entertainment

Lights, camera, action! Tax exemption for films
  • South Africa
  • October 26 2017

Section 12O of the Income Tax Act provides an incentive to stimulate the domestic production of films in the form of an exemption from normal tax for income derived from the exploitation rights of a film. The South African Revenue Service recently issued guidance reflecting its interpretation of this provision.


Real Estate

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