3. Electronic Theses and Dissertations (ETDs) - All submissions
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Item A critical analysis of the relevance of the South African research and development tax incentive to small and medium-sized enterprises (SMEs) and start-ups(2019) Tau, ThatoIndustries, companies, and economies; all are changing and staying still is not an option. This highlights the importance of innovation, and how it can no longer be dismissed as just another business buzzword. In the same vein, the important role that small and medium-sized enterprises (SMEs) and start-up companies play in driving innovation, job creation, economic growth, and social values cannot be ignored. One way in which governments can better nurture and support the participation of SMEs and start-ups in the promotion of innovation, thereby driving productivity, growth and job creation, is through research and development (R&D) tax incentives. There are a variety of ways in which the design of R&D tax incentives can be shaped. There is also scope to sharpen its focus by closer targeting of organisations identified as vital for society but have special needs for support. For instance, many countries who offer an R&D tax incentive either explicitly or implicitly target SMEs and start-ups who are often loss-making and for whom some incentives can be a highly-valued source of finance. This research report explores whether the South African R&D tax incentive benefits SMEs and start-up companies by comparing various design features of the South African R&D tax incentive against some other countries’ R&D tax incentives. The main findings show that although the Department of Science and Technology has gone some way to fixing the issues previously faced by the R&D tax incentive programme, there is still more that can and should be done to ensure that the incentive better meets the interests of SMEs and start-ups.Item Critical analysis of the effects of e-commerce on taxation(2019-03) Hirschowitz, Debrah AnnE-commerce has become a significant part of the global economy and will continue to grow. However, e-commerce doesn’t only provide exceptional growth opportunities, but also creates considerable challenges in terms of taxation. Due to the nature of e-commerce, various commercial activities are carried out in cyberspace where trade is not confined by geographical boundaries. This study is motivated by the key importance of understanding the taxation landscape in a rapidly growing digital economy. In this study the impact of e-commerce on taxation is explored by means of a systematic literature review. The primary research question was: what is the impact of e-commerce on taxation? In order to address the research question, secondary questions were formulated to firstly attend to the broader tax challenges in a digital economy and to determine how these challenges lead to tax avoidance practices. Secondly, the impact of e-commerce on taxation was explored specifically in terms of the artificial avoidance of the permanent residence status. Thirdly, the prevention of artificial avoidance of the permanent residence status was reviewed as well as investigating what practices have been put in place by some countries to protect their tax bases. Based on the research question, the objective of this study was to explore and provide an overview of the existing literature to determine what the impact of ecommerce has been in terms of the challenges it poses to taxation. Due to the exploratory nature of the research, it was a qualitative study within the interpretivist paradigm. In this study, the aim was not to identify a specific theory, but rather to explore the existing literature and provide an overview of how e-commerce affects taxation within the framework of the primary and secondary research questions by means of systematic literature review. In terms of the findings, the broader tax challenges were identified as: nexus, data and value-creation, the characterisation of payments and the impact of highly digitised business models. It was further established that these challenges created an environment where significant tax avoidance practices are employed by highly digitised organisations. The key tax avoidance practices were identified as: avoiding withholding tax, the use of preferential tax regimes, artificial internal trading of intangibles, internal debt shifting, transfer pricing and avoiding taxable presence. This study has certain limitations, since the full domain of e-commerce and taxation is vast and complex and beyond the scope of a research report. Therefore, the key challenge that was explored is the artificial avoidance of the permanent residence status which is an issue that lies at the heart of the nexus issue since a PE normally requires some sort of physical presence which is not necessarily the case in the digital economy. This study contributes to the existing body of knowledge as a useful assessment of the impact of e-commerce on the digital economy as well as the associated tax avoidance practices. Furthermore, in conducting the research, it became apparent to the researcher that South Africa has very limited exposure in the field of the tax challenges relating to e-commerce. This research could therefore provide some insight into some of the key tax challenges identified in the international arena and this study could provide a starting point from a South African perspective.Item Tax in the digital age: is South Africa's current income tax legislation adequate for the taxation of the digital economy and e-commerce?(2019) De Abreu, De Abreu GabrielaThe purpose of this research report is to examine South Africa’s current income tax legislation and determine whether or not it is appropriate for taxing the digital economy and related transactions and activities i.e. e-commerce. In particular this research report focuses on the source rules and the application of double tax agreements in respect of the permanent establishment concept, found in South Africa’s income tax legislation, when applied to the digital economy and e-commerce. This research report critically analyses the solutions being pursued in other jurisdictions by legislators, tax administrators and international organisations and how these possible solutions could be considered and implemented into South African tax legislation.Item Possible solutions to the challenges posed by e-commerce on the permanent establishment concept: a South African perspective(2018) Lamula, Nomthandazo EvelynElectronic commerce (‘e-commerce’) is an essential part of the modern world that people live in. It involves cross border business transactions operating simultaneously. Where a business operates in two different jurisdictions at the same time, it faces challenges when determining to what extent, it becomes liable for taxation in either or both jurisdictions.1 The objective of this research is to examine the evolution of the concept of permanent establishment, the manner in which e-commerce affects this concept, and explores possible mechanisms of imposing tax on cross-border e-commerce transactions. It commences with an analysis of the application of the South African tax jurisdiction over residents and non-residents, in order to establish the extent of its jurisdiction over cross border transactions. It then proceed to provide a perspective on the functioning of e-commerce and the challenges it posed to the current South African taxation system. The research findings indicate that the current Organization for Economic Cooperation and Development (‘OECD’) concept of permanent establishment does not accommodate for the taxation of e-commerce transactions. It concludes with recommendations which can be used by the South African revenue authorities to ensure efficient tax collection on e-commerce transactions.