General Anti-Avoidance Rules and Tax Treaties: A South African perspective

by | May 28, 2022 | SAMLJ, SAMLJ V33 I3

General Anti-Avoidance Rules and Tax Treaties: A South African perspective

Author: Reinhard Rudd

ISSN: 1996-2185
Affiliations: Senior Lecturer, School of Accountancy, University of the Witwatersrand
Source: South African Mercantile Law Journal, Volume 33 Issue 3, 2021, p. 384 – 418

Abstract

The domestic laws of many countries contain statutory general anti-avoidance rules, or ‘GAAR’. As tax avoidance schemes have proliferated, especially in a cross-border context, the relative importance of a country’s GAAR has increased. A question that arises is whether a country’s GAAR can be invoked to deny the benefits granted by a tax treaty. The question is complicated by the fact that, as international agreements, tax treaties are subject to public international law, while at the same time forming part of the domestic laws of the states party to the treaty. While the Organisation for Economic Co-operation and Development has attempted to provide clarity in this regard, the answer remains dependent on the manner in which tax treaties interact with the domestic laws of the specific jurisdictions in question. In terms of South African law, the provisions of a tax treaty rank equally with those of domestic law. As a result, any conflict must be resolved by the application of the principles of statutory interpretation and superseding of legislation. Despite this fact, the South African courts tend to favour an approach whereby the provisions of domestic law and those of a treaty are reconciled, rather than having one prevail over the other. The author argues that the GAAR may be applied in a treaty context, provided that the purpose of a treaty and the GAAR can be reconciled. Ultimately, the author is of the view that certainty in this regard can only be achieved through some form of legislative intervention. 

The Case for Further Reform of the Banks’ Advisory Duty in South Africa Post the Financial Advisory and Intermediary Services Act 37 of 2002

by | May 28, 2022 | SAMLJ, SAMLJ V33 I3

The Case for Further Reform of the Banks’ Advisory Duty in South Africa Post the Financial Advisory and Intermediary Services Act 37 of 2002

Authors: WG Schulze and SLW Mokobi

ISSN: 1996-2185
Affiliations: Professor in Banking Law, University of South Africa; Attorney, High Court of Botswana
Source: South African Mercantile Law Journal, Volume 33 Issue 3, 2021, p. 419 – 446

Abstract

The nature and extent of a financial service provider’s (‘FSP’s’) liability for the advice or information that it provides is a core issue globally and is frequently cited in complaints and lawsuits.  Commercial banks are particularly vulnerable to advice liability and cannot afford to downplay the risk as they continue with fast-paced innovation. In this context the Financial Advisory and Investment Services Act (‘FAIS Act’) has attempted to intervene in the FSP– customer relationship by regulating conduct and elevating advisory standards. Unfortunately, the Act is constrained by antiquated distinctions and has failed to improve on the common-law advisory duty. It is hoped that the proposed Conduct of Financial Institutions Bill will improve on this. The current statutory exclusions from the definition of ‘advice’ lead to a dichotomy that is unhelpful in modern banking. Furthermore, the lack of recourse to a statutory mechanism in respect of what are currently deemed ‘non-FAIS’ activities is confusing.  The consequences of the current legislative framework are a lack of legal clarity (which is not good for business), inadequate regulation, and an increase in abusive practices. A reform of the legislation is needed, failing which the courts should develop the common law to impose liability even absent a regulated advisory relationship. 

Appraisal of Financial Inclusion in South Africa: Proposing the Agent Banking Model Implemented in Malaysia

by | May 28, 2022 | SAMLJ, SAMLJ V33 I3

Appraisal of Financial Inclusion in South Africa: Proposing the Agent Banking Model Implemented in Malaysia

Author: MG Van Niekerk

ISSN: 1996-2185
Affiliations: Senior Lecturer, University of Limpopo
Source: South African Mercantile Law Journal, Volume 33 Issue 3, 2021, p. 447 – 469

Abstract

Financial inclusion is a burning issue around the world, especially in emerging markets such as South Africa. Its importance lies in the fact that it will effectively reduce inequality in this country in the long term. This contribution traces formal financial inclusion measures in South Africa. The transformation to financial inclusion after 1994 increased inclusion from 61 per cent in 2004 to 93 per cent in 2018.  The article highlights the fact that when people use bank accounts as mailboxes (where all money is withdrawn as soon as it comes into the account), some issues need to be addressed to ensure that they are properly banked. Indications are that only 48 per cent of all adults in South Africa can be considered to be properly banked. In South Africa, financial inclusion was explicitly legislated for the first time by the Financial Sector Regulation Act 9 of 2017. This article assesses the role of agent banking — the provision of financial services through agents or third-party intermediaries on behalf of financial institutions — in increasing financial inclusion in Malaysia. The Malaysian agent banking model could be beneficial to South Africa’s efforts to ensure that more people have access to a bank account that they can use regularly. 

Case Notes: ‘Semantic Gyrations’ – When are Naartjies Oranges? Beneath the Surface of Absa Bank Limited v CSars

by | May 28, 2022 | SAMLJ, SAMLJ V33 I3

Case Notes: ‘Semantic Gyrations’ – When are Naartjies Oranges? Beneath the Surface of Absa Bank Limited v CSars

Authors: Teresa Pidduck and Sumarie Swanepoel

ISSN: 1996-2185
Affiliations: University of Pretoria, Department of Taxation; University of Pretoria, Department of Taxation
Source: South African Mercantile Law Journal, Volume 33 Issue 3, 2021, p. 470 – 495

Abstract

None

A Critical Analysis of the Amendments Proposed to the Social and Ethics Committee by the Companies Amendment Bill, 2018

by | Jan 12, 2022 | SAMLJ, SAMLJ V33 I2

A Critical Analysis of the Amendments Proposed to the Social and Ethics Committee by the Companies Amendment Bill, 2018

Authors: Delani Milton Mahhumane and Rehana Cassim

ISSN: 1996-2185
Affiliations: Former Postgraduate Assistant, Department of Mercantile Law, University of South Africa; Associate Professor, Department of Mercantile Law, University of South Africa
Source: South African Mercantile Law Journal, Volume 33 Issue 2, 2021, p. 153 – 175
https://doi.org/10.47348/SAMLJ/v33/i2a1

Abstract

The Companies Amendment Bill, 2018 proposes certain changes to the social and ethics committee established in terms of s 72(4) of the Companies Act 71 of 2008 and reg 43 of the Companies Regulations, 2011. These new provisions are critically discussed in this article. Although some of these provisions are commendable, others give rise to certain concerns examined here: the lack of clarity in the functions of the social and ethics committee, the proposed amendments regarding its appointment and composition, and the ambiguity in the exemptions from the requirement to appoint this committee. This article also suggests further amendments to the current legislative provisions regarding this committee.

Investigating the Need to Introduce Compulsory Interest Arbitration as a Method to Prevent Lengthy Strikes in South Africa

by | Jan 12, 2022 | SAMLJ, SAMLJ V33 I2

Investigating the Need to Introduce Compulsory Interest Arbitration as a Method to Prevent Lengthy Strikes in South Africa

Author: Mlungisi Tenza

ISSN: 1996-2185
Affiliations: Senior Lecturer, School of Law, University of KwaZulu-Natal
Source: South African Mercantile Law Journal, Volume 33 Issue 2, 2021, p. 176 – 199
https://doi.org/10.47348/SAMLJ/v33/i2a2

Abstract

The issue of lengthy strikes in South Africa has been a cause for concern since it destabilises the economy and can result in a loss of employment if it is not managed properly. A strike that takes too long to be resolved causes anger towards strikers, so creating a fertile environment for the eruption of violence between striking and non-striking workers. Damage to property and harm to civilians has been reported where striking workers have become violent during a strike. It appears that the existing remedies fail to curb long strikes and resultant violence, as unions and members continue with their action despite the granting of an order of interdict to stop the conduct. To solve the problem of long and consequently violent strikes, the article advocates the introduction of a compulsory interest arbitration in the labour relations law of South Africa. A compulsory interest arbitration will force the parties into arbitration once it is established that the strike has continued for an unreasonably long period without a solution. The use of compulsory interest arbitration will not be unique to South Africa, as other countries such as Canada and Australia use it in their labour relations systems – which helps them deal with long and possibly harmful or violent strikes. The article argues that lessons can be learned from these countries on how South Africa can deal with its own protracted strikes. The article further proposes that the LRA be amended to include a provision that will enable the Minister to intervene where the parties fail to reach agreement on disputed issues, and where it is in the public interest to do so. Introducing a compulsory interest arbitration in the labour relations system could limit the right to strike. However, the article argues that such a limitation may be justified in terms of s 36 of the Constitution.