4. Electronic Theses and Dissertations (ETDs) - Faculties submissions

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    Trust Taxation Reform in South Africa: Striking a Balance Between Tax Neutrality and Effective Compliance (Lessons from the United Kingdom and the United States of America)
    (University of the Witwatersrand, Johannesburg, 2024) Dhanpat, Sanjiv; Blumenthal, Roy; Koker, Alwyn de
    South Africa's trust legislation revisions under the General Laws Amendment Act, 22 of 2022, intend to address international concerns highlighted by the Financial Action Task Force (FATF), most notably concerns affecting tax evasion and a lack of transparency around beneficial ownership. This research report examines trust legislative amendments, particularly the Trust Property Control Act (TPCA) 57 of 1988, as well as various other legislative acts in the trust sector. This research report further provides a comparative assessment of South Africa's trust legislative amendments against legislative measures utilized in the United Kingdom and the United States of America. This comparison is relevant given the diverse but well-established frameworks for dealing with trusts within these jurisdictions. The objective of this comparison is to find similarities and significant variances in how each nation taxes and regulates trusts. Aligned with the FATF's focus on addressing deficiencies in beneficial ownership transparency, this research report also examines the growing emphasis on beneficial ownership transparency from a worldwide context. In the broader context of this research, the comparison between the United Kingdom and the United States of America is relevant to highlight their regulatory procedures for ensuring tax neutrality and effective compliance in the trust landscape. South Africa's amendments to the Trust Property Control Act (TPCA) aim to enhance transparency around beneficial ownership. However, administrative and enforcement challenges may affect the overall effectiveness of these reforms. This research, through comparative analysis of the United Kingdom's Trust Registration Service (TRS) and the United States' Corporate Transparency Act (CTA), provides valuable insights for improving trust oversight in South Africa. The findings suggest that while adopting similar measures could strengthen South Africa's regulatory framework, adequate resource allocation for enforcement and ensuring trustee compliance are essential for achieving effective regulation. This research report contributes to the critical discussion on trust regulation mechanisms by analysing the delicate balance between overregulation and the need to implement appropriate safeguards against trust abuse
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    The proposed global minimum tax: implications for South Africa
    (University of the Witwatersrand, Johannesburg, 2022) Moticoe, Lucky Calvin
    Digitalisation and globalisation have resulted in the free movement of capital and trade between countries and has had a profound impact on the global economy. These global business reforms have brought with them challenges to the international tax laws that have existed more than 100 years without any reforms, therefore, creating an opportunity for base erosion profit shifting (BEPS). These challenges resulted in a need for a co-ordinated effort by the global communities to ensure that business income is taxed where economic activities take place, and international tax laws keep up with the accelerated rate of development in international business. To bring reforms to the international tax laws and level the playing field in international corporate taxation, the OECD and the G20 countries joined forces and developed an Action Plan to address BEPS in September 2013; an action plan that came with 15 recommendations to tackle BEPS to be implemented by interested jurisdictions. Much progress had been made during the years, but one key issue remained outstanding on the BEPS issues; taxing the digital economy. On 08 October 2021, over 135 Inclusive Framework members joined forces and agreed to a two-pillar solution to reform the international tax rules. The two-pillar solution proposed a global minimumtax of 15% to ensure that multinational enterprises pay their fair share of tax where economic activities are conducted.South Africa is one of the jurisdictions that expressed interest in the proposal and is asignatory to the proposal. It is, however, not clear how the global minimum tax will impact South Africa should it decide to adopt this. This report aims to evaluate the impact the global minimum tax will have on South Africa should it decide to adopt, with focus on policy implications, its ability to use tax incentives to attract investment (specific focus on the SEZ programme), and infringement on its tax sovereignty. The results of the report revealed that South Africa might be faced with some tough policy implications that will need careful consideration before the decision to adopt can be made. It was further found that the ability to use tax incentives as a policy instrument to attract investment (under the SEZ programme) may be under a serious threat, considering all the other challenges with which the country is currently faced. The adoption of the proposal will not infringe on the tax sovereignty of the country as it is a voluntary process that countries may chose not to adopt if they so wish.
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    Effect of Anti-Tax Avoidance Laws on the Location of Patent Ownership and Research and Development Activities in Multinational Corporations
    (© University of the Witswatersrand, Johannesburg, 2022-03-31) Masiye, Fortunate; Blumenthal, Roy
    Multinational corporations (MNCs) are always under scrutiny for engaging in activities that tax authorities allege are solely intended to lower the tax burden of these organiza- tions. Consequently, governments are always formulating new laws, rules, and regula- tions that target tax avoidance activities of MNCs, limiting approaches and legal loop- holes that may be used to lower the corporations’ tax burden. This study investigates how anti-avoidance laws influence the location of patent ownership and research and devel- opment (R&D) activities of MNCs. It is a study that takes a closer look at the murky waters that characterize the international taxation system to see how global players navi- gate taxation measures for their own benefit. The study visits tax destinations like South Africa, Ireland, and the US to highlight the characteristics of tax systems and to throw light on the situation on the ground. Ultimately, growing evidence from resource studies and the news media indicates that MNCs have resorted to shifting profits from high- to low-tax jurisdictions with the aim of lowering their overall corporate tax obligation. It is an explosive study that reflects the interesting web of activities that persist behind the international tax regulations. People have forged careers out of maneuvering tax ju- risdictions to save millions of dollars for MNCs.
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    Trusts in hybrid mismatch arrangements: does the OECD BEPS action plan adequately address the unique attributes of trusts?
    (2022) de Koker, Lori Adiella
    This paper assesses whether the Organization for Economic Co-operation and Development (OECD) has effectively neutralised trust-based hybrid mismatch arrangements with the recommendations incorporated in Action 2 of the Base Erosion and Profit Shifting (BEPS) Action Plan. The OECD employed a consequentialist approach to hybrid mismatch arrangements, focusing on mending the outcomes of mismatch transactions as opposed to the source of the mismatches. Since trusts comprise several distinctive attributes, such as conflicts of attribution, which may result in mismatches, the OECD encountered difficulties in addressing trust-based mismatched systematically through the consequentialist approach. Slow convergence from the international community represents a further threat to the success of the OECD initiative. This paper will explore the adoption of the Action 2 recommendations concerning trustbased mismatches within the international community, placing a focus on South Africa. Possible alternatives to address hybrid mismatch arrangements will also be assessed.