4. Electronic Theses and Dissertations (ETDs) - Faculties submissions
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Item A case study on the impact of section 10(1)(o)(ii) of the South African Income Tax Act on South African Expatriates(University of the Witwatersrand, Johannesburg, 2023) Forbes, NicoleGlobalisation has triggered the onset of the migrant work force, which in turn, has created complexities with regards to striking a fine balance between preventing tax spill overs in relation to potential double taxation and remaining tax competitive in order to retain and attract South African tax residents (De Koker & Brincker, 2010; Fuest, Huber, & Mintz, 2005; Spengel & Fischer, 2022). SouthAfrica taxes residents on their worldwide income, and on 1 March 2020, section 10(1)(o)(ii) of the Income Tax Act 1962 (hereafter referred to as “the Act”) was amended with the objective of addressing tax disparities in respect of taxes being levied on remuneration earned from a local source versus internationally, through limiting tax relief to R1, 250,000 for foreign-derived remuneration (Africa, 2021; De Koker & Brincker, 2010; Ferreira, 2020; Govender, 2019; Hutchon & Kim, 2020; Naidoo, 2019; SARS, 2021a, 2021c; Sebashe, Erasmus, & Erasmus, 2021). This discussion-based research report evaluates the impact of the amendment to section 10(1)(o)(ii) in relation to foreign remuneration earned by South African expatriates. Similar to prior research, conducted by Govender (2019), Naidoo (2019) and Sebashe et al. (2021), this research report draws comparisons amongst South African expatriates earning employment income from (i) the United Arab Emirates (UAE), where no personal income tax is currently levied (PwC, 2022c); (ii) the United Kingdom (UK), where non-residents are entitled to a personal allowance, i.e. tax relieve of GBP 12,500 for the 2020/2021 tax year if their UK sourced taxable income is less than GBP 100,000 (Gov.UK, 2022) and (iii) the United States of America (USA), where non-residents or alternatively termed ‘non-resident aliens’, are not entitled to a standard personal tax deduction (PwC, 2022g). The comparative case studies aim to assess whether or not the revised and promulgated section 10(1)(o)(ii) has aided in restoring fairness in the levying of tax, through contrasting i) pre 1 March 2020 tax treatment of section 10(1)(o)(ii), i.e. one hundred percent exemption of foreign remuneration and ii) 1 March 2020 tax treatment of section 10(1)(o)(ii), the introduction of “expat taxation” (Africa, 2021; De Koker & Brincker, 2010; Ferreira, 2020; Govender, 2019; SARS, 2021c; Sebashe et al., 2021). In addition, this report evaluates the impact of through (i) double tax agreements (DTAs); (ii) section 6quat of the Act; (iii) personal allowances/reductions and (iv) change in tax residency on a South African expatriate’s overall local personal tax position (the impact discussed, but not specifically evaluated in the case study computations) (De Koker & Brincker, 2010; Ferreira, 2020; Govender, 2019; Hutchon & Kim, 2020; Sebashe et al., 2021). Furthermore, the report assesses the impact of the revised and promulgatedsection 10(1)(o)(ii) on the low, moderate and high remuneration earners, in accordance with prior research conducted by Sebashe et al. (2021), the aim is to assess whether or not the amended to expat tax exemption, namely, the introduction of the R1,250,000 exemption threshold, had an adverse effect of the local tax positions of low and moderate foreign remuneration earnersItem A comparative analysis and subsequent recommendations for improvement of the draft advance pricing agreement legislation in South Africa(University of the Witwatersrand, Johannesburg, 2023-06) Carvalho, Monique Fernandes; Blumenthal, RoyWhen dealing with multinational enterprises (MNEs) which are connected parties and located within in different jurisdictions, they must transact with each other and set prices at which they transfer goods or services1 between each other on an arm’s length basis (Ernst & Young (EY)(2021); United Nations (UN)(2021: 29)). According to the Organisation for Economic Co-operation and Development (OECD), the arm’s length principle (ALP) assists MNEs to identify the price at which a transaction would take place, had its members in fact been subject to market forces. In other words, the transfer price set for those transactions between unconnected persons should be used as a benchmark against which to appraise those transactions taking place between connected persons; any identified discrepancies may thereafter lead to a potential future adjustment which gives rise to transfer pricing disputes between taxpayers and the tax authorities. (South African Revenue Service (SARS) (1999: 8).) In order to minimise these transfer pricing disputes, the OECD emphasised the need for a more proactive, clear, effective discussion to take place between taxpayers and the tax authorities. The OECD has identified and communicated a proactive, upfront dispute resolution mechanism, known as advance pricing agreements (APAs). APAs are a tool that attempts to prevent disputes from arising through the proactive, upfront engagement betweenthe taxpayers and tax authorities. (Organisation for Economic Co-operation and Development (OECD)(2016: 7 – 8); OECD (2022 a: 213).) APAs are not yet governed under South African (SA) legislation; however, although the South African Revenue Service (SARS) has submitted draft legislation on APAs for public comment, nevertheless no further steps have yet been taken to date (SARS (2021)). One of the biggest challenges of APAs which far removes their practically is the period within which they take place until completion. Statistically, there is a limitation in the amount of data which is available when dealing with APAs as a topic in isolation. The author selected a number of OECD member countries from which she was able to retrieve a limited but relevant amount of data from reliable sources, which clarifies the average time period it takes to complete an APA from start to end. The author selected both the United States of America (USA) and United Kingdom (UK) for reasons which are set out below in this research report. This research report provides a comparative analysis of the draft APA legislation submitted by SARS in SA, in comparison with the APA legislation promulgated and followed in the USA and UK. Subsequently, suggested improvements to the draft APA legislation in SA by reference to the APA legislation followed both in the USA and UK are further provided.Item A comparative analysis of income tax provisions applied to cross border secondment arrangements in South Africa and the UK(2022) Sibeko, ThulileThe world has in recent years become increasingly interconnected as a result of massively increased trade and cultural exchange, and cross-border mobilisation is more frequently discussed in many companies. Most multi-national companies have a global mobility policy in place, which sets out the parameters for cross-border employment. As the internationalisation of South African business activity sped up enormously over the last half century, cross border employment will be one of the priorities for South African multinational companies as well as the South African Revenue Service (‘SARS’). (Mohan, 2016.) The purpose of this report is to examine and compare the legislative, administrative and judicial approaches to cross border employment in South Africa and contrast this with those adopted and endorsed by the United Kingdom. This report will also analyse the implications of an entity creating a permanent establishment through secondment contracts and also tax implications for the employees. The report will provide a comprehensive analysis of the income tax provisions applicable to the residency and non-residency of both the entity and the individual, thus analysing the definition of a resident in s 1 of the Income Tax Act 58 of 1962 in South Africa and UK section 1A(4) of the Finance Act of 2019 in the United Kingdom. The United Kingdom has been rated one of the top countries where South Africans would like to work and to which South Africans would like to emigrate (BusinessTech, 2020). The United Kingdom is also one of South Africa’s main trade partners (IOL Business, 2020). South Africa has a double tax agreement with the United Kingdom. South Africa and the United Kingdom are on a progressive tax system. (SARS 2021) (Brady, 2019)Item A Comparative Analysis of South Africa's Tax Penalty Regime in Relation to the United States of America and the Commonwealth of Australia(University of the Witwatersrand, Johannesburg, 2023) Poyana, Luvuyo Sidewell; Viljoen, MichelleUndoubtedly, tax compliance poses a significant challenge for all revenue collection authorities. Aspects such as self-assessment and electronic commerce further accentuate the importance of tax compliance. With self-assessment, the onus of calculating the appropriate tax liability and ensuring compliance with payment requirements rests on the taxpayer, rather than the revenue authority. While the Republic of South Africa has recently revised its penalty regime and enacted new legislation through the Tax Administration Act 28 of 2011, replacing the previous regime governed by Sections 75 and 76 of the Income Tax Act 58 of 1962, it remains imperative and pertinent to examine the operative penalty regime. Such an examination is essential to comprehend and confirm the extent and application of penalties in various circumstances. In order to ensure that the penalty regime of the Republic of South Africa is in accordance with internationally recognised best practices, this research report undertakes a comparative analysis with the United States of America and the Commonwealth of Australia. These jurisdictions possess extensive practical experience in the realm of tax administrative laws over an extended period. By drawing upon their insights, valuable lessons can be gleaned to enhance the effectiveness and alignment of South Africa's penalty regime. This research report aims to provide insights into the effectiveness of South Africa's penalty regime and identify potential areas for improvement by examining the similarities and differences in the implementation and administration of non-compliance and understatement penalties in the Republic of South Africa (RSA), the United States of America and the Commonwealth of Australia. By analysing the penalty regimes of these three countries, the research report identifies challenges or disputes that may arise with reference to previous litigations and provide policymakers and tax authorities with valuable information to improve the administration and implementation of penalties. The report suggests that, while the establishment of the new Tax Administration Act, No 28 of 2011, has demonstrated a standardised and systematic approach to non-compliance and understatement penalties, the subjective nature of the taxpayer’s behaviour is always going to result in non-compliance by some taxpayers. The comparison indicates that the South African penalty regime is relatively high in terms of understatement penalties and lower in terms of non-compliance penalties. However, the overall administrative penalties are broadly aligned with the Commonwealth of Australia and the United States of America.Item A comparative study and analysis of the amended foreign employment income exemption in South Africa(University of the Witwatersrand, Johannesburg, 2023-01) Essop, Ahmed; Blumenthal, RoyTax exemptions are granted by the government for a multitude of reasons. These include providing some form of tax relief, alleviating specifically identified tax burdens, encouraging investment, promoting donations to approved public benefit organizations and avoiding the possibility of double taxation (Kransdorff, 2010, p. 79). One specific provision in section 10(1)(o)(ii) of the South African Income Tax Act of 1962, pertained to South African residents working abroad, namely the foreign employment income exemption. The intention of this exemption was to prevent residents from being double taxed (SARS, 2021a). Over the last few years, there has been a noted increase in the number of South Africans working abroad and this has been alluded to as being one of the reasons that government decided to review and amend the section 10(1)(o)(ii) foreign employment income exemption (Ryan, 2020). The impact of this amendment on South African residents working abroad will be analysed and investigated. A comparative analysis will be done on the tax payable of South African residents working in the following countries: the UK, the UAE and IndiaItem A comparative study of green taxation in South Africa, Australia, Singapore, and India(University of the Witwatersrand, Johannesburg, 2023) Mokwena, Dankie; Kolitz, MaveveGlobal warming and climate change have been on the agenda for years, with discussions on dealing with and mitigating their effects on humanity and the environment (Brink, 2019, Para. 1) Industrialization, as the driver of economic development, has resulted in massive pollution emissions (Ahhmad and Zhao, 2018:3). In an effort to protect the environment and encourage sustainability, tax policies and mechanisms have been used and trusted as effective methods for government to influence society`s behavior (Brink, 2019, Para. 2). Government across different countries have introduced green taxation, including tax incentives, cash grants, and soft loans aimed at encouraging investment in environmental, social, and governance-related projects (PwC, 2023a:3)Item A comparison of the United Kingdom’s Digital Services Tax regime and the OECD Two-pillar approach: Is this unilateral measure hindering the implementation of the Pillar Two model?(© University of the Witswatersrand, Johannesburg, 2023-05) Nong, Thato; Padia, MishaBase Erosion and Profit Shifting (BEPS) has become the focal point for Multinational Enterprises (MNEs) with the aim of maximising their profits and minimising or totally avoiding their tax payable to a jurisdiction. The goal of this study is to highlight the tax concerns that have arisen as a result of digitisation, which have exacerbated the erosion of the tax base and profit shifting in the United Kingdom from the standpoint of Corporate Income Taxes (CIT). It will examine the Digital Services Tax in further depth, contrast it to the OECD Pillar Two, and provide a proposal on whether the DST impedes a global solution. BEPS has left several governments concerned about their revenue collection regulations, especially as the world commerce economy becomes more computerised. The research methodology used for this study is qualitative and interpretive of the UK's Digital Services Tax Act and the OECD Two- Pillar model. The introduction of the Digital Services Tax in the United Kingdom to tax in- scope earnings is an appropriate interim solution; nonetheless, multinational corporations face the possibility of being double-taxed, with no easily available redress, thus not aligning with global best practices as explained in the study. In order to combat BEPS, the Organisation for Economic Cooperation and Development (OECD), in collaboration with the Group of Twenty (G20) forum and other developing countries, established a two-pillar approach, which, before implementation, will require the rejection of all unilateral measures such as DSTs. This study supports the worldwide proposal that unilateral actions adopted by jurisdictions such as the UK to safeguard their tax base must be opposed in the context of direct taxeSItem A critical analysis of Section 19 and Paragraph 12a of the eighth schedule of the Income Tax Act for debt transactions(2020) Tifflin, TanyaThe Income Tax Act 58 of 1962 was amended, with effect from 1 January 2013, by the introduction of a set of structured debt relief rules (also referred to as the debt relief provisions). The rules were stipulated in section 19 and paragraph 12A of the Eighth Schedule of the Income Tax Act. These rules have been amended several times since they came into effect on 1 January 2013. Section 19 and paragraph 12A of the Eighth Schedule of the Income Tax Act regulate the situation where a debt is cancelled, waived, forgiven or discharged for no consideration (or for a consideration which is less than the amount of the debt). The rules were intended to assist distressed debtors by simplifying the debt reduction process without creating further tax liabilities. Since the introduction of section 19 and paragraph 12A of the Eighth Schedule, there have been many issues raised in the media around the application and interpretation of various aspects of the legislation. This has resulted in numerous amendments. The purpose of this study is to analyse the legislation from its inception to establish whether (despite the numerous amendments) there are any unintended consequences in the legislation applicable to the 2020 tax year, in order to suggest possible solutions. The study revealed flaws and unintended consequences of the exclusions to the debt relief rules which relate to donations tax, estate duty and liquidated companies. Appropriate recommendations have been suggested to solve these problems. The study identified issues with the concepts of ‘market value’ and ‘effective interest’ in the context of debt to share conversions and recommended, among other things, that interpretation notes be provided to solve the problems. In addition, the study discussed the loophole which exists in section 19(6A) and paragraph 12A(4) of the Eighth Schedule. This loophole has resulted in the application of the debt relief rules not triggering any income tax in instances where assets are sold in the same tax year in which a debt benefit arises. Finally, the study discussed the implications and consequences of the retrospective application of the 2019 amendment to section 19(6A) and paragraph 12A(4) of the Eighth Schedule of the Income Tax Act and recommended that these amendments only apply to transactions which were concluded from 1 January 2019.Item A critical analysis of section 45 of the income tax act 58 of 1962(University of the Witwatersrand, Johannesburg, 2023) Nyoka, Rejoice Nombulelo; Blumentha, RoyThe introduction of CGT in SA resulted in the birth of the corporate restructuring rollover tax relief to avoid tax on the transfer of assets within the same economic unit. Section 45 of the Act specifically provides a deferral tax rollover relief for the transfer of assets within the same group of companies. The built-in anti-avoidance rules in section 45 of the Act did not prevent taxpayers from abusing this tax rollover relief, instead it gave birth to innovative tax-free exit from investments and debt-push down schemes. Lawmakers mitigated the tax relief abuse by implementing burdensome rule-based anti-avoidance rules. This study aims to critically analyse the intended purpose of section 45 of the Act and how the rule-based anti-avoidance rules in section 45 of the Act unduly hamper the efficacy of this tax relief.Item A critical analysis of sugar tax in South Africa(University of the Witswatersrand, Johannesburg, 2022-03-30) Irinoye, Nakedi Jane Vanessa; Blumenthal, RoyGlobally the major leading cause of death is associated with non-communicable diseases (NCDs) and increasing in both First and Third World countries, including South Africa. The change from traditional to processed food, more energy-dense food, sugar-based drinks, more added salt, fat and sugar, are all referred to as the ‘western diet’. The transition of the food environment has been associatedwith individual influences such as behaviors, knowledge and attitudes. Globally the consumption of sugar-based drinks has increased at an alarming rate and major non-communicable diseases (NCDs) are associated with the excessive intake of sugar. One of the global health risks is obesity. In creating food environments that are healthy, international jurisdictions formulate policies and environmental interventions as an effective tool. Taxes have been employed to stabilise a downturn in the market and change the price, which have affected consumers’ purchasing decisions. In this report, sugar tax was critically analysed by evaluating the impact of the tax on the market, employment, imports and exports. Several policy design options of taxing sugar-based drinks as formulated and introduced by the World Health Organization (WHO) and The Organization for Economic Co-operation and Development (OECD) were compared. In order to determine the sustainability of the policy design option implemented by South Africa, the policy design option was compared to that implemented by other jurisdictions namely, the United States of America, Mexico and Denmark. The opponents of sugar tax challengedthe implementation of initiatives and utilization of income generated from sugar tax in South AfricaItem A critical analysis of the corporate restructuring rules(University of the Witwatersrand, Johannesburg, 2023-01) Botha, Petrus Hendrik; Rudd, ReinhardAs a result of Covid-19, there is likely to be an increase in company restructuring in South Africa. The Income Tax Act 58 of 1962 contains group relief measures, also commonly referred to as the “corporate rules”. The purpose of the corporate rules, considering the policy objectives of competitiveness, was twofold, firstly, to encourage domestic restructuring of South African companies to promote growth and, secondly, to alleviate unintended hardships caused by the introduction of capital gains tax, which was introduced at the same time. The corporate rules provide relief from capital gains tax and normal tax consequences. In addition, the corporate rules defer the payment of dividends tax, transfer duty, donations tax, securities transfer tax and value-added tax. In this report the corporate rules contained in the Income Tax Act are critically analysed to ascertain whether the rules are economically and administratively efficient and whether the purpose and needs for which they were introduced, are met. In the current study, where the corporate rules are found to be inefficient, suitable recommendations are made. In analysing the corporate rules, the recommendations made during March 2018 by the Davis Tax Committee in its report to the Minister of Finance, are considered. In addition, this research investigates whether successive transactions utilising the corporate rules could be implemented, as well as whether the general anti-avoidance rules contained in the Income Tax Act could apply to corporate rule transactions. A group company taxation regime, as an alternative to the corporate rules, is also briefly discussed. The report concludes that the corporate rules currently achieve the purpose for which the rules were implemented, that is, to alleviate unforeseen hardship caused by the enactment of capital gains tax in 2001, as well as normal tax and to encourage domestic restructuring of South African groups of companies to promote growth. Ultimately, the shortcomings of the corporate rules, such as the mechanical nature of the rules due to the rules being rules based, possible double taxation and the various complex anti- avoidance provisions should be considered further by the legislature.Item A critical analysis of the foreign business establishment exemption and its role in the prevention of base erosion and profit shifting(University of the Witwatersrand, Johannesburg, 2023) Vally, Ra’eesahSection 9D of the Income Tax Act 58 of 1962 sets out the controlled foreign companies rules. This section contains anti-avoidance provisions that seek to prevent South African tax residents shifting their taxable income to foreign countries by way of a controlled foreign company. In terms of section 9D the net income of controlled foreign companies is taxed in the hands of the South African residents in proportion or their shareholding, unless the amount is subject to one of the specific exemptions. One such exemption is the foreign business establishment exemption. This exemption has been criticised as the definition of foreign business establishment is not adequate. The criticism arises from the fact that many controlled foreign companies meet the definition of a foreign business establishment by default even though they do not constitute a bona fide foreign business establishment. This paper critically evaluates this exemption considering the OECD BEPS Pillar Two Rules, the Income Tax Act 58 of 1962 and the Mauritian and UAE substance standards and whether the rules of this exemption should be more specific and stringent. The substance standards were found to be more stringent in comparison to the FBE definition and therefore enhanced the FBE definition. The scope of the Pillar Two blueprint meant that many South African companies would more likely than not be scoped out of its realms and therefore would not assist in enhancing the FBE definitionItem A critical analysis of the General Anti‐avoidance rules as envisaged in sections 80A‐80L of the Income Tax Act 58 of 1962(University of the Witswatersrand, Johannesburg, 2021) Ngcobo, MatshidisoThe general anti‐avoidance provisions commonly known as general anti‐avoidance rules or “GAAR” exist in many jurisdictions around the world. Tax authorities, lawmakers and other stakeholders (such as the Organisation for Economic Co‐operation and Development (OECD)) around the world introduced and continuously develop the anti‐avoidance rules applicable in their respective jurisdictions. The purpose of this report is to critically analyse the general anti‐avoidance provisions in their old form (i.e. section 103(1) of the Income Tax Act prior to its repeal) and the current form (i.e. sections 80A to 80L of the Income Tax Act) in order to assess whether the current provisions are achieving the objective of protecting the fiscus against the non‐payment/delayed payment of tax. This report will also analyse the Australian general anti‐avoidance rules. Such provisions or rules serve to protect a country’s tax base or the fiscus from transaction(s) entered by taxpayers for the sole or main reason of obtaining a tax benefit. Anti‐avoidance provisions aim at identifying these transactions and reversing whatever tax benefit that might have been derived from the transaction where such transaction(s) were entered into for the sole or main reason of obtaining the tax benefit.Item A critical analysis of the pillar one direct tax solutions for businesses in the digital economy(University of the Witwatersrand, Johannesburg, 2023) Mthembu, SiboneloBusiness profit under the existing international tax system is taxed in the state of residence unless the entity has generated the said profit through a permanent establishment in another state. Traditionally, a business had to have a physical presence in the source state to be considered a permanent establishment. (European Parliament, 2019a, p. 17; World Bank, 2021, p. 26). The digitalisation of the economy allows multinational entities to do business with customers worldwide without having a physical presence in those customers' locations. (World Bank, 2021, p. 26), while the current international tax law is depended on the physical presence of the entity in a location, i.e., a permanent establishment (European Parliament, 2019a, p. 16; World Bank, 2021, p. 26). In the digital economy, the concept of a permanent establishment becomes irrelevant (Medus, 2017, p. 15). The OECD acknowledged that businesses with high levels of digitalisation could generate significant profits and engage in national economic life without having a sizable physical presence (OECD, 2015a, pp. 100-102). The European Parliament (2019a, p. 16) reported that due to these gaps in the current international tax system, digital businesses pay an average tax rate of 9%, while traditional businesses pay an average tax rate of 21%. In October 2020, the OECD published the blueprint with the recommendation to address the direct taxation of the digital economy, entitled ‘Tax challenges arising from Digitalisation – Report on Pillar One Blueprint’ (Pillar One). These recommendations will be effective in 2024 once the inclusive framework members have signed the Multilateral Convention (OECD, 2022a, p. 5). In addition to the Pillar One report, the OECD issued a progress report entitled ‘Progress Report on Amount A of Pillar One, Two-Pillar Solution to the Tax Challenges of the Digitalisation of the Economy’ (Progress Report) in July 2021. Lastly, to address the administrative challenges, the OECD, in October 2022, issued the draft administrationprinciples to be followed by the in-scope multinational entities on the report entitled ‘ProgressReport on the Administration and Tax Certainty Aspects of Pillar One’ (the Administration Report). Researchers and tax policymakers have researched the taxation of the digital economy or e-commerce. However, the focus of those studies was to analyse the tax challenges brought about by the digitalisation of the economy and propose solutions that can be adopted to 2 | P a g e address the direct tax challenges brought about by the digitalisation of the economy (European Parliament, 2019). This research report aims to analyse how digital businesses will be taxed using the recommended direct tax solutions from Pillar One. The OECD issued Pillar One to address the current international tax law gaps.Item A critical evaluation and comparative study on section 10(1)(o)(ii) foreign employment exemption(University of the Witwatersrand, Johannesburg, 2022) Margolius, Caryn; Kolitz, MaeveIn 2001, South Africa changed to a residence-based system of taxation to align with international best practice and to limit the opportunities for tax arbitrage (Manuel, 2000, 36.). Section 10(1)(o)(ii) of the Income Tax Act 58 of 1962 (the Act) was amended to exempt foreign employment income of a resident if the resident was outside his or her country of residence for a period exceeding 183 days (National Treasury, 2000, 5). National Treasury cautioned against this exemption and in the Explanatory Memorandum on the Revenue Laws Amendment Bill, 2000 it was stated, The effect of the relief measure will be monitored to determine whether certain categories of employees abuse it to earn foreign employment income without foreign taxation. The main purpose of the exemption was to prevent double taxation from occurring, considering the limited number of double taxation agreements concluded between South Africa and other countries at the time (Mzizi, 2017, 10). The exemption created an opportunity for double non-taxation where the source country imposes little or no tax on employment income and no tax was applied in South Africa (Legwaila, 2019). Consequently, in the Budget Review 2017, National Treasury sought to amend the provisions of s 10(1)(o)(ii) as it was seen to be ‘excessively generous’. At first, National Treasury proposed to repeal the exemption, however after much consultation and public comments received, National Treasury introduced a capped exemption limited to R1 million in line with the principle of fairness and progressivity (National Treasury, 2017b, 7). Subsequently, in the 2020 Budget Review, the exemption threshold was revised upwards to R1.25 million per year from 1 March 2020 to encourage all South Africans working abroad to maintain their ties to South Africa. In this report, the researcher investigates the qualifying requirements and implications of s 10(1)(o)(ii) on South African resident expatriates, their employers (local and foreign) and the South African Revenue Service (SARS)Item A post-implementation review of IFRS 15(University of the Witwatersrand, Johannesburg, 2023) Govender, Brentin; van Zijl, WayneThe purpose of this study is to explore the financial reporting implications of South Africa’s adoption of IFRS 15. This paper looks specifically at the usefulness of IFRS 15 in comparison with IAS 18, IAS 11 and its related interpretations from the perception of Chartered Accountants (SA) in South Africa. The research adopted a quantitative method using a survey. Primary data collected from 109 completed survey responses received from auditors, academics regulators, users of financial statements and preparers to evaluate whether IFRS 15 is more useful than the previous revenue standards. The findings suggest that the implementation of IFRS 15 has achieved the objectives set out by the IASB for issuing the new revenue standard. This has resulted in IFRS 15 providing more useful information than IAS 18 and IAS 11 as South African CA(SA)’s perceived IFRS 15 to improve the fundamental and enhancing qualitative characteristics of useful information. There are drawbacks to the implementation of IFRS 15 being high costs and the risk of incorrect application of IFRS 15. The findings also reveal that it is too complex to determine if IFRS 15 has reduced the opportunity for management bias or manipulation. This paper contributes to the accounting literature on the usefulness of new accounting standards from the perspective of Chartered Accountants (SA) in South AfricaItem An analysis of whether the Two‐Pillar Solution is an equitable solution for developing countries in addressing tax challenges of a digital economy(University of the Witwatersrand, Johannesburg, 2022) Van Dyk, Tertia; Blumenthal , RoyThe purpose of this research report is to determine whether key elements of the Organisation for Economic Co‐operation and Development (OECD) Two‐Pillar Solution are equitable to developing countries. The key principles contained in the Two‐Pillar Solution will be critically discussed to determine whether these rules are designed in a manner that: I. Allows for appropriate and acceptable tax competition for developing countries to fairly compete with larger economies; and II. Ensures that multinational enterprises pay adequate tax in the developing countries where they operate, extract value and generate profits. The report seeks to understand who the key role players are, what base erosion and profit shifting (BEPS) challenges have arisen caused by the digitalisation of the global economy, and how the OECD Two‐Pillar Solution seeks to address these challenges. This analysis is conducted through the lens of developing countries, which are vulnerable to inequitable allocation of taxing rights. The report seeks to assess whether the key elements of the Two‐Pillar Solution are consistent with existing international tax rules that govern the allocation of taxing rights and, in some instances, challenges whether the existing rules on international tax are equitable to developing countries in the first place. The role of tax policy and tax competition from the perspective of developing countries will be discussed. Finally, the effectiveness of alternative mechanisms to address tax abuse will be assessed, including digital services tax and controlled foreign company rules, will be examined. Key Words: Multinational enterprises, base erosion and profit shifting, BEPS, inclusive framework, Global Anti‐Base Erosion Model, developing countries, tax incentives, controlled foreign company rules, effective tax rate, low‐taxed income, G20, digital services tax, Organisation for Economic Co‐Operation and DevelopmentItem An analysis of Circular Economy disclosures and the impact on Integrated Reporting(2022) Mahadew, KashmiraThe impact of global markets on the natural environment has resulted in a rapid depletion of resources. The circular economy (CE) model is a sustainable business model which aims to stay within the limits of the planet and reduce the impact on the environment by decreasing excessive resource use, minimizing waste, and converting end-of-life goods into resources for further use. This research aims to investigate disclosures by Johannesburg Stock Exchange (JSE) listed companies by analysing the type of investments in developing and achieving a CE, the quality and nature of disclosures on a CE, and the related impact on the six capitals. A content analysis method was used to analyse a sample of integrated reports of JSE listed companies. Correlation coefficients were used to evaluate the relationships between the CE disclosures and 21 identified elements, and the Kruskal-Wallis and Jonckheere-Terpstra tests were used to evaluate the significant differences among industries, company size, and year when analysing the CE disclosures. This paper finds that a significant number of CE disclosures are located in the value creation and business model location of the integrated reports, the quality and type of investments to achieve a CE model tending to differ across different industries, company sizes, and year. The research revealed that CE disclosures are becoming more prominent in South Africa. The quality of reporting is moderately low. Industries which have a higher environmental impact and have extensive physical infrastructure tend to have better disclosure on their investments in the six capitals than service-driven industries. Both the quantity and quality of disclosures are better for larger companies. The research finds that companies are increasingly investing in research and development, and partnerships with research groups, think tanks and other third parties to drive their CE adoption. This paper contributes to both corporate reporting and the CE concept by evaluating the link between a CE model and integrated reporting and the impact which CE disclosures have on the six capitals of a companyItem An analysis of the impact of the respective environmental, social and governance performances on firm value in South Africa(University of the Witwatersrand, Johannesburg, 2023-03) Rewachanda, Saihil; Sebastian, AvaniBackground: There is increasing pressure on South African firms to invest in sustainable initiatives. As a result, the impact of environmental, social and governance (ESG) performance on firm value has become a significant area for research. Notwithstanding the growing importance of ESG performance, the majority of prior research has focused largely on ESG disclosure. From an integrated thinking perspective, firms are required to consider their impact on each of the E, S and G aspects of sustainable value creation. However, prior research has concentrated on combined ESG ratings, rather than disaggregating the ratings to analyse the impact of the respective environmental, social and governance pillars on firm value. Purpose: The aim of this research report is to examine the relationship between firm value and respective environmental (E), social (S) and governance (G) performance ratings in South Africa. Method: The study utilises ESG performance ratings from rating agencies, FTSE and Bloomberg, as well as internal and external perspectives of firm value. Data was analysed using descriptive statistics and regression analysis over the five-year period from 2018 to 2022. Results: No relationship between E, S or G performance and firm value was statistically significant, irrespective of the measure of firm value used or the ESG rating used. Implications: The results indicate that investors might not incorporate E, S and G performance ratings in their investment decisions. From an internal firm perspective, the results indicate that management might not incorporate E, S and G performances in their value creation decisions. Significance: Due to the findings of the non-significant relationships between E, S and G performances and firm value, this study contributes to existing academic research as it foregrounds the need for further investigation into the value relevance of ESG performance ratings on firm valueItem An analysis of the section level of detail and disclosure of the six capitals in the strategy, risk and performance sections of the integrated reports of top JSE-listed companies(2022) Steenkamp, Amy Catherine ReginaPurpose: This thesis assesses the level of detail of the strategy, risk and performance sections of 240 integrated reports of 30 companies selected from the top 100 JSE-listed companies by market capitalisation on 09 June 2021 for their 2013 to 2020 financial years. It also assesses whether the six capitals of the IIRC’s Framework are addressed in these sections. Method: A disclosure checklist was developed interpretively, based on relevant literature. Content analysis was used to evaluate the level of detail of the respective sections of the sampled companies’ integrated reports and whether the six capitals are addressed in these sections. Descriptive statistical tools, Kruskal-Wallis H tests, Jonckheere-Terpstra tests, and correlation tests (Spearman’s rho and Kendall’s tau-b), were performed to analyse the data and determine if there are significant associations between year, industry, market capitalisation (grouping variables), and level of detail and capital presence (dependent variables). Key findings: There was a great level of detail in the strategy, risk and performance sections of the integrated reports. In the respective sections, the companies mentioned their strategy, risk and performance factors. They provided descriptions of these factors and/or provided company specific results on the factors mentioned. Significant positive associations were evident between level of detail and the grouping variables. The six capitals were often included in the sections. On average, companies included between 4 and 6 capitals in all integrated report sections. The presence of financial capital and social and relationship capital were prominent in the various sections. The presence of natural capital was the least referenced of the six capitals. Significant differences were evident between the grouping variables and various capitals in the sections. Contribution: This paper is an exploratory study which assesses the level of detail and capital presence in specific integrated reporting sections. The longitudinal nature of the study (which coincides with the publication of the IIRC’s Framework (2013) and King IV (2016)) can add to the limited number of studies on integrated thinking and reporting. A basic level of detail analysis of the strategy, risk and performance sections may be useful to understand content which firms are relaying about their value creation processes. This paper can assist stakeholders in better understanding integrated thinking through the IIRC’s six-capital model.