Standing Committee on Finance public hearings on the Draft Taxation Laws

Amendment Bill, 2012

(22 August 2012)1

We made formal submission of our comments.

We will address only limited sections during this presentation.

2

We are in agreement with the change of the definition of equity

share as we are also of the opinion that the previous definition

was linked to the Companies Act 61 of 1973 and the new

Companies Act 71 of 2008 does not define equity shares.

However the proposed amendment to the definition is now too

limiting as it may lead to unintended consequences in Section 45

where shares are sold as redeemable preference shares that do

specify the redemption period, but has a fixed dividend rate to

their BEE partners. The proposed definition may lead to these

entities regrouping their instruments to fit into this definition.

3

Section 8F(1)(d) - We appreciate the Small

business relief on the hybrid recharacterisation

rules. However the total gross asset value not in

excess of R10million is very low and fail to

recognise different enterprise structures. A

service provider has a different asset structure

and need from that of a retail or manufacturing

enterprise.

4

Section 159 of the draft TLAB to amend section 21 of the

Value-Added Tax Act.

We agree that debit note and credit note should be used to

correct a previously issued tax invoice and the

amendments are necessary. However, the addition of (f)

allowing for when error or omission has occurred in respect

of the particulars required under section 20(4) or (5) to be

contained in a tax invoice is too broad.

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The debit note or credit note is intended to record the

altering of a supply or consideration related to the supply

(discount, consideration amount, return of goods, and

cancellation of supply). Section 21 should not detract from

the vendor’s requirement to issue a tax invoice as required

in terms of section 20.

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A document issued as a ‘tax invoice’ should have at least a

minimum requirement, and the credit or debit note must refer

to such tax invoice, and as such the original tax invoice as

issued in terms of section 20 should be at least in the currency

of the republic, express “tax invoice” in a prominent place, have

an individual serialized invoice number (important for auditing

and referencing purposes) and the suppliers address and vat

registration number. If these are not present, then the

document issued is merely an ‘invoice’ as defined, and should

not be regarded as a ‘tax invoice’ issued in terms of section 20.

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If the ‘tax invoice’ has not been issued, the provisions of

section 21 cannot apply.

Therefore, we propose that paragraph (f) be limited to read

“an error or omission has occurred in respect if the

particulars required under section 20(4)(c), (4)(e), (4)(f), (4)

(g), (5)(d), or (5)(e) to be contained in a tax invoice,”

8

Thank you

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