South Africa updates

Corporate Tax

Contributed by Cliffe Dekker Hofmeyr
Important judgment for taxpayers regarding trading stock valuation
  • South Africa
  • 18 January 2019

The Supreme Court of Appeal recently determined whether the net realisable value of taxpayers' trading stock should be accepted as representing the value of the trading stock held and not disposed of at the end of the respective assessment years. This judgment will undoubtedly have a far-reaching and profound impact on how taxpayers and the South African Revenue Service consider, interpret and apply Section 22(1)(a) of the Income Tax Act.

No tax on interest? Ruling pertaining to convention between South Africa and Brazil
  • South Africa
  • 04 January 2019

The South African Revenue Service (SARS) recently issued a binding private ruling dealing with relief from the double taxation of interest under the double tax agreement between South Africa and Brazil. SARS ruled that the agreement grants exclusive taxing rights to Brazil in respect of the interest that applicants receive on bonds issued by the Brazilian government, which means that the interest will not be taxable in South Africa.

New e-services regulations: widening invisible VAT net
  • South Africa
  • 21 December 2018

In response to the ever-increasing world of e-commerce and cross-border digital trade, South Africa introduced legislation with effect from 1 June 2014 which requires foreign suppliers of e-services to register as value added tax vendors. Following the revised draft regulations which were published on Budget Day 2018, the National Treasury published the final regulations, which will significantly broaden the definition of 'electronic services'.

Good news for lenders? Further proposed amendments to doubtful debt provisions
  • South Africa
  • 14 December 2018

The National Treasury and the South African Revenue Service recently appeared before Parliament's Standing Committee on Finance to provide it with a further update regarding some of the proposals contained in the draft Taxation Laws Amendment Bill published earlier in 2018. These amendments will come into force once the bill has been passed by Parliament, signed by the president and published in the Government Gazette.

Is the Office of the Tax Ombud doing its job?
  • South Africa
  • 07 December 2018

Since its establishment in October 2013, the Office of the Tax Ombud (OTO) has been expected to enhance South Africa's tax administration system. Although the OTO has proven its value to the industry and taxpayers alike by resolving complaints, securing large refunds and launching much-anticipated investigations, its greatest challenge continues to be proving that it is equipped and has the capacity to go toe-to-toe with the South African Revenue Service.


Healthcare & Life Sciences

Contributed by Edward Nathan Sonnenbergs Inc
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.

Biopharming: new frontier for affordable medicines
  • South Africa
  • 11 April 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.


Intellectual Property

Contributed by KISCH IP
Don't file your cannabis trademarks… yet
  • South Africa
  • 14 January 2019

The Constitutional Court's recent judgment decriminalising the private use of cannabis has garnered significant attention in South Africa. As predicted, the judgment has encouraged a number of existing and potential companies to create a brand for their business in order to grow and distribute cannabis in South Africa. Unfortunately, most of these businesses must delay their plans for their brand's trademark application – although possibly not for long.

Compelling case for patenting
  • South Africa
  • 10 December 2018

South Africa is an attractive launch pad for many international companies when it comes to the protection and enforcement of intellectual property for their services or products that they wish to share with Africa. Even more attractive is South Africa's simple, quick and affordable patent system. There is no patent opposition in South Africa and the validity of a patent can be challenged only post-grant by way of the court system.

IP and the shape of things
  • South Africa
  • 03 December 2018

Proprietors that are interested in registering a shape or container mark should be aware of the kind of protection that a specific IP act affords them and ensure that they layer their rights in order to have the best protection as well as protection in perpetuity. The most important question for proprietors in this regard is whether they intend to use the shape for a short or prolonged period.

University life and intellectual property
  • South Africa
  • 26 November 2018

When a student is studying or planning to study at a university in South Africa, it is important that they understand their rights as an IP creator during that time. Many students, especially undergraduates, will argue that they do not participate in research and development in any manner and that intellectual property is merely a module for law students. However, all students may be IP creators without being aware of it.

#FillUp – why trademarks should be registered
  • South Africa
  • 12 November 2018

In order to build a brand, one of the most important steps is to register a trademark. The first step is to conduct a search of the Trademarks Register to ensure that the trademark does not infringe registered rights. Provided that the results of this clearance search are favourable, the next step is to file an application for registration. However, this is not the final step, as action can be taken for trademark infringement only once the trademark has been registered.


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.

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.


Shipping & Transport

Contributed by Bowmans
Court clarifies impact of 'business rescue' regime on admiralty matters
  • South Africa
  • 20 June 2018

The promulgation of the Companies Act 2008 saw the introduction of a company rehabilitation process termed 'business rescue'. As in many other jurisdictions, a company under business rescue enjoys a temporary moratorium on the prosecution of claims with a view to allowing the distressed company breathing space to reverse its financial difficulties and avoid full-scale liquidation. Against this background, admiralty matters have enjoyed special treatment in the context of claims against insolvent companies.

What the International Arbitration Act means for maritime law
  • South Africa
  • 14 February 2018

The recent promulgation of the International Arbitration Act gave the United Nations Commission on International Trade Law Model Law on International Commercial Arbitration the force of law in South Africa. Given the cross-border nature of shipping disputes, the act promises to enhance ​the attraction of what is already a litigation-friendly jurisdiction.

Hanjin fallout – part two: High Court refuses time extension for writs of arrest in rem
  • South Africa
  • 22 November 2017

The High Court's decision in a recent case involving a protective writ issued by a creditor of Hanjin at the time of the company's collapse was recently appealed before the Supreme Court of Appeal. A number of Hanjin creditors have filed an application for a time extension to serve the writs of arrest pending the outcome of the appeal. In the absence of an extension, the writs will have no further force or effect.

Hanjin fallout: end of protective writs in South Africa?
  • South Africa
  • 27 September 2017

The longstanding practice of issuing a protective writ is directed at preserving the claimant's right to arrest a vessel in rem, notwithstanding a subsequent change of ownership. This matter did not come before the South African courts until recently, when the buyer of a vessel applied to the courts to have the protective writ set aside. The root of the problem lies in the apparent paradoxical Admiralty Jurisdiction Regulation Act provisions relating to the time of commencement of an admiralty action.

Court recognises territory of Western Sahara's prima facie right in cargo dispute
  • South Africa
  • 28 June 2017

In a recent case, the Saharawi Arab Democratic Republic and the Polisario Front successfully applied to the Eastern Cape Local Division of the High Court for an order restraining and prohibiting the owners, master and charterers of the Cherry Blossom vessel, among other parties, from taking a cargo of phosphate out of the court's jurisdiction, pending the determination of the applicants' claim to ownership and delivery of the cargo.