Home Career Financial Planning A “Group Tax” Regime – In the Works?

A “Group Tax” Regime – In the Works?


A primary criticism by taxpayers and tax practitioners alike, is that our tax regime is far too complex and the cost of compliance, too onerous. Commissioner for the South African Revenue Service Pravin Gordhan has been known to imply that it is only a select minority (primarily, sophisticated taxpayers who are able to afford the services of a clever tax consultant) that exploit loopholes in our legislation, to the detriment of the public as a whole.

A primary criticism by taxpayers and tax practitioners alike, is that our tax regime is far too complex and the cost of compliance, too onerous. Commissioner for the South African Revenue Service Pravin Gordhan has been known to imply that it is only a select minority (primarily, sophisticated taxpayers who are able to afford the services of a clever tax consultant) that exploit loopholes in our legislation, to the detriment of the public as a whole.

For years now lobbyists have been pursuing the call for a ‘Group Tax’ regime which would allow for companies in a group to be treated, in the main, as a single taxpayer (the ultimate holding company would generally take responsibility for the tax obligations of all the companies in the Group, essentially submitting one tax return on behalf of the Group, as a whole).

Proponents have long argued that this would stamp out tax arbitrage in a Group structure where it is more likely to be practised – an area that SARS too is aware of – and would go a long way to simplifying the tax regime and reducing the administrative burden for companies. Others have subscribed to the view that it is consistent with the group restructuring concessions. Indeed, more have criticised the fiscus for not expeditiously following the international trend in this area.

A ‘Group tax’ regime is still relatively new to the first world and if South Africa were to pursue it, it would mean a deeper relationship of trust between taxpayers and the fiscus. A precursor to adopting such a regime would also require that SARS act as a single unit as opposed to the divvying up of tax collections by region, etc. for purposes of performance management, revenue targets and the like.

On the face of it, it would appear that the practical issues arising for SARS are far more likely to defer the implementation of such a regime. That is not to say that there is no merit in committing resources to clearly establish the way forward.

By Nazrien Kader, Director, Deloitte   With acknowledgement to Business Day

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