A critical analysis of the foreign business establishment exemption and its role in the prevention of base erosion and profit shifting
| dc.contributor.author | Vally, Ra’eesah | |
| dc.date.accessioned | 2024-06-18T08:19:57Z | |
| dc.date.available | 2024-06-18T08:19:57Z | |
| dc.date.issued | 2023 | |
| dc.description | A research report to be submitted to the Faculty of Commerce, Law and Management in the partial fulfilment of the requirements for the degree of Master of Commerce (Specilaising in Taxation), University of the Witwatersrand, Johannesburg, 2023 | |
| dc.description.abstract | Section 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 definition | |
| dc.description.submitter | MM2024 | |
| dc.faculty | Faculty of Commerce, Law and Management | |
| dc.identifier.citation | Vally, Ra’eesah . (2023). A critical analysis of the foreign business establishment exemption and its role in the prevention of base erosion and profit shifting [Master’s dissertation, University of the Witwatersrand, Johannesburg]. WireDSpace. https://hdl.handle.net/10539/38672 | |
| dc.identifier.uri | https://hdl.handle.net/10539/38672 | |
| dc.language.iso | en | |
| dc.publisher | University of the Witwatersrand, Johannesburg | |
| dc.rights | © 2023 University of the Witwatersrand, Johannesburg. All rights reserved. The copyright in this work vests in the University of the Witwatersrand, Johannesburg. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of University of the Witwatersrand, Johannesburg. | |
| dc.school | School of Accountancy | |
| dc.subject | Controlled foreign company | |
| dc.subject | Foreign business establishment | |
| dc.subject | Resident | |
| dc.subject | Substance standards | |
| dc.subject | Multinational Enterprises | |
| dc.subject | Tax avoidance | |
| dc.subject | Base erosion and profit shifting | |
| dc.subject | UCTD | |
| dc.subject.other | SDG-8: Decent work and economic growth | |
| dc.title | A critical analysis of the foreign business establishment exemption and its role in the prevention of base erosion and profit shifting | |
| dc.type | Dissertation |