Faculty of Commerce, Law and Management (ETDs)

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    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, Misha
    Base 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 taxeS
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    The impact of tax avoidance practices on tax revenue collection in South Africa
    (2023) Nkadimeng, Hendrick Legamane
    The study examines the impact of the tax avoidance practices on the collection of tax revenues by the South African Revenue Service. It examines the extent to which collection of tax revenues is compromised by the application of some of the tax avoidance practices by the taxpayers. Various tax avoidance practices were studied and analyzed for the purposes of the study. The analysis includes, amongst others, the court cases, online academic articles, books, media releases and theses for the purposes of putting together reliable source of data. Each source of information was studied and analyzed separately for the purposes of the study. South Africa, as a developing country, has been impacted negatively by some of the tax avoidances practices applicable within the South African tax law. The country has lost quite significantly, over the years, some of the tax revenue amounts which could have been collected had the tax avoidance practices not been applicable within the tax legislation in South Africa. The research study concludes by analyzing few possibilities and recommendations on how the South African Revenue Service could possibly ensure that collection on tax revenues is maximized while the tax legislation remains fair and transparent to the taxpayer.
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    The arm’s length pricing for intra-group services – transfer pricing
    (2017) Lee, Yi Ying
    The purpose of this research report is to identify any improvements that can be made to the South African transfer pricing legislation for intra-group services. South Africa’s transfer pricing legislation for intra-group services will be compared to Aligning Transfer Pricing Outcomes with Value Creation, Action 8-10, 2015 Final Reports, OECD/G20 Base Erosion and Profit Shifting Project (‘BEPS Action Plan’) released by the Organisation for Economic Co-operation and Development (‘OECD’). The Action 10 of the BEPS Action Plan introduces a simplified transfer pricing approach for low value-adding intra-group services. The simplified approach aims to reduce base erosion payments through excessive management fees and head office expenses (OECD, 2015:141). According to Verlinden and Katz (2015:1): ‘… the simplified approach lowers the burden on multinational enterprise groups to demonstrate the beneficial nature of the low value-adding activities for other MNE group members; and allows for an elective approach for reducing the administration involved in the pricing of low value-adding services. The OECD is achieving an appropriate balance between theoretical sophistication and practical application that is commensurate with the tax at stake in the countries paying and receiving the charges … .’ This approach will benefit tax authorities with limited resources in performing transfer pricing audits enabling them to verify the arm’s length nature within the intra-group services charge (Watson, 2015:8). Key words: Anti-avoidance, BEPS Action Plan, Transfer Pricing, Arm’s Length Method, Arm’s Length Price, Intra-Group Services, Low Value-Adding Intra-Group Services, Comparable Uncontrolled Price Method, Resale Price Method, Cost Plus Method, Transactional Net Margin Method, OECD Guidelines, OECD.