CATEGORIES
- (47)Accounting & Financial Reporting
- (1)Accounting for Income Tax
- (1)Application of tax rates, s6(2) rebates
- (1)Assessed losses
- (10)Blogs
- (1)Business Advisory
- (8)Capital Gains Tax
- (1)Capital Gains Tax - Individuals Tax
- (1)Capital Gains Tax Implications of Trusts
- (2)Case study: Home office expense
- (1)Case study: Travel allowances
- (1)Company Formations
- (136)Corporate Tax
- (10)Customs and Excise
- (2)Deceased Estate
- (1)Deductions Pre-trade and prepaid expenses
- (1)Deregistration
- (2)Employer and Employee (PAYE and UIF Specific)
- (1)Estate Duty
- (1)Events / Webinars
- (11)Faculty News
- (2)Farming
- (168)Individuals Tax
- (1)Input - Customs Duty
- (3)Interest
- (18)International Tax
- (1)Nature of the rights of beneficiaries
- (1)Notional input tax
- (9)Payroll
- (2)Practical Payroll
- (2)Provisional tax (Link with other Taxes)
- (4)SARS Issues
- (156)Tax Administration
- (2)Tax Administration Part 2B: Resolving Problems with SARS using the Tax Ombud
- (1)Tax Administration Part 3B Dispute Resolution - Objection and appeal
- (3)Tax Dispute Resolution
- (1)Tax Opinions
- (3)Tax Update
- (1)Tax implications of loans to trusts
- (1)Tax residence
- (1)Tax returns and payments
- (3)Transfer-Pricing
- (1)Trust Income / Gain Allocations
- (1)Trust types and income allocations
- (10)Trusts
- (84)VAT
- (3)VAT periods
- (1)Wear and tear allowances
- (13)Wills, Estates & Succession
- (1)Zero Rated
- (2)eFiling
- Show All
South African Tax Court rules in favour of taxpayer in ‘most favoured nation’ test case
- 06 May 2020
- Individuals Tax
- Mareli Treurnicht and Emil Brincker
Monday, 01 July 2019
Important:
This article is based on tax law for the tax year ending 28 February 2020.
Authors: Mareli Treurnicht and Emil Brincker (Cliffe Dekker Hofmeyr)
On 12 June 2019 the Cape Town Tax Court delivered its judgment in the dividends tax test case between ABC Pty Ltd (Taxpayer) and the South African Revenue Service (SARS). The case pertained to SARS’s refusal to refund dividends tax overpaid by the Taxpayer following the Taxpayer’s interpretation of the ‘most favoured nation’ provision (MFN clause) in the double taxation agreement (DTA) between South Africa (SA) and the Netherlands (SA/Netherlands DTA) (Dutch MFN clause), read with the MFN clause in the SA/Sweden DTA (Swedish MFN clause) and the SA/Kuwait DTA.
The Tax Court found in favour of the Taxpayer, ordering SARS to refund the dividends tax overpaid to the Taxpayer with interest, as well as ordering SARS to pay the Taxpayer’s costs including the costs of two counsel. Cliffe Dekker Hofmeyr represented the Taxpayer in the matter.
The Tax Court judgment is of great importance to the many South African taxpayers involved in similar dividends withholding tax disputes with SARS pertaining to the interpretation of DTAs. The Tax Court is the first South African court to rule on this particular issue.
The SA case comes after the Dutch Supreme Court (Hoge Raad) on 18 January 2019 found in favour of a taxpayer in its judgment pertaining to the same issues. That case was an appeal by the Dutch Tax Authorities against an earlier decision of the Dutch High Court (Gerechtshof ‘s-Hertogenbosch) in which the Dutch High Court ruled that the Dutch MFN clause read with the same clauses and DTAs apply to exempt taxpayers from dividends tax where dividends are paid by a Dutch resident company to a SA resident.
Please click here to read more.
This article first appeared on cliffedekkerhofmeyr.com.