+ All Categories
Home > Documents > The Fiscal Analysis on Capital Gains Taxing Rights

The Fiscal Analysis on Capital Gains Taxing Rights

Date post: 16-Apr-2017
Category:
Upload: prof-handley-mpoki-mafwenga
View: 174 times
Download: 1 times
Share this document with a friend
17
Transcript
Page 1: The Fiscal Analysis on Capital Gains Taxing Rights
Page 2: The Fiscal Analysis on Capital Gains Taxing Rights

Journal Vol. 31, Issue 2

April - June, 2014

Modigliani and Miller (1958). "The cost of capital, corporation finance and the theory of investment." American Economic Review 1958; 48: p 261-297.

Moss, J., and Stine, B., (1993). "Cash Conversion Cycle and Firm Size: A Study of Retail Firms", Managerial Finance, VoLl9, pp. 25-35.

Muthuva (2009). "The Influence of working capital management components on corporate profitability," Research journal of business management, ISSN 1818-1932.

Ndunguru, (2007). Research methodology for social science. Mzumbe: Research information and publications department. Nobanee Raitham and Modar Abdullatif, (2005). Cash Conversion Cycle and Firm's Performance ofJapanese Firms, Padachi, (2006). "Trends in Working Capital Management and its Impact on Firms' Performance." International Review of Business Research Papers. Vol 2(2), pp 45 - 58

Petersen, M. Rajan, R (1997). "Trade Credit: Theories and Evidence." Review of Financial Studies 1997; VoLl 0 pp 661-691.

The National Board of Accountants and Auditors

Raheman and Nasr (2007). "Working Capital Management and Profitability - Case of Pakistani Firms." International Review of Business Research Papers Vol.3 No.1, pp. 279 - 300.

Shin, R., and L. Soenen, (1998). "Efficiency of Working Capital and Corporate Profitability", Financial Practice and Education, Vol. 8, pp. 37-45.

Shin and Soenen (1998). "Efficiency of Working Capital Management and Corporate Profitability." Journal of Financial Practice and Education, Vol. 8(2), pp.37-45.

Uyar (2009). "The Relationship of Cash Conversion Cycle with Firm Size and Profitability. An Empirical Investigation in Turkey." International Research Journal of Finance and Economics, No. 24, pp 186-193

Wang (2002). "Liquidity management, operating performance, and corporate value. Evidence from Japan and Taiwan." Journal of Multinational Financial Management, Vol. 12(2), pp. 159-169.

Wu, (2001). The Determinant of Working Capital Management Policy and Its Impact on Performance, National Science Council Project, 2001.

-Journal

Vol. 31, Issue 2

April - June, 2014

THE FISCAL ANALYSIS ON CAPITAL GAINS TAXING RIGHTS -

A Reflection of N on-Compliance by the Multinational Mining Companies

Abstract

in Tanzania

By Prof Handley Mpoki Mafwenga Ph.D, MSc, MBA, PGDTM, ADTM, LLB

Macro-Fiscal Policy, Legal, Advocacy and Tax Expert (Gov-URT) [Visiting Associate Professor Iringa University & Teofilo Kisanji University]

Offshore holding companies of the mining companies operating in the URT may globally own property and may avoid capital gains tax; they may be subject to a low (or even zero) rate of capital gains tax because companies are usually incorporated in a jurisdiction where the tax regime is very favourable towards non-residents. The mining companies can easily transfer the ownership of the property by transferring the shares. One of the main advantages of owning property offshore include among others; the beneficial owner of the company may be able to avoid capital gains and ultimately avoid capital gains tax that would otherwise be payable if the asset was owned directly. This Paper therefore, investigates the reasons as to why mining companies would attain motives to sale their shares outside URT, how the legal framework has failed to enforce collection of capital gains tax, and it further proposes the remedial measures for the challenge.

INTRODUCTION

Scope of Charge ability Capital gains tax is a fragment of the income tax that can be attained from the alienation of immovable and movable property and it is guided by the ITA Cap 332. In the case of Eisner v. Macomber 252 U.S. 189 (1920 No 318)1,

Eisner v. Macomber 252 u.s. 189 (1920 No 318) Brief Facts: Mrs. Macomber owned 2,200 shares in Standard Oil. Standard Oil declared a 50% stock dividend and she received 1,100 additional

shares, of which about $20,000 in par value represented earnings accumulated by the company-recapitalized rather than distributed-since the effective date of the original tax law. The current statute expressly included stock dividends in income, and the government contended that those certificates should be taxed as income to Mrs. Macomber as though the corporation had distributed money to her. Mrs. Macomber sued Mr. Mark Eisner, the Collector of Internal Revenue, for a refund.

Issue: Essentially, therefore, [i.e. in light of the fact that stock and cash dividends are economically equivalent,] the question in Macomber was not whether the shareholder had gain in an economic sense, but whether in legal or accounting terms the stock dividend was to be regarded as a taxable event.

Held: The Court ordered that Macomber be refunded the tax she overpaid. What is or is not "income" within the meaning of the Amendment must be determined in each case according to truth and substance, without regard to form. Income may be defined as the gain derived from capital, from labor, or from both combined, including profit gained through sale or conversion of capital.

The National Board of Accountants and Auditors

Page 3: The Fiscal Analysis on Capital Gains Taxing Rights

Journal Vol. 31, Issue 2

April - June, 2014

taxed in that State". The term "immovable property" includes among mineral deposits, sources and other natural resources. Refer the case of Rupert Kimber v HMRC 2012] UKFTT 107 (TC) (08 February 2012)4;

The scope of the information covers any and all information that relates to the enforcement and administration of the requesting jurisdictions ' tax laws, including, information relating to capital gains5 and includes income information, bank: information, transfer pricing information, ownership information etc. (Tax and Development Practical Guide on Exchange of Information for Developing countries 2012).

There are International Norms, rules and rights as provided under the Vienna Convention of the Law of Treaties where States have original jurisdiction to tax in accordance with the international law. Likewise, by virtue of section 31 of the Vienna Convention of the Law of Treaties, the treaty must be interpreted in good faith with its ordinary meaning in light with its object and purpose. In any case where there are no treaties, the Domestic Law is taken into account for the interpretation of DTA when nothing more can be derived from the treaty itself. Hence, even courts have been using the "Substance over Form" to disregard the legal form of a transaction in favour of its time economic substance. (Refer also the case of Afrika Mashariki Gold Mines Ltd V Commissioner General TTLR 3 (2005) 6(Mafwenga 2012).

4 Rupert Kimber v HMRC 20l 2} UKFIT 107 (TC) (08 February 2012) Brief Facts: The taxpayer returned to the UK having spent many years abroad, working in Japan. He returned to the UK on 17 July 2005 and

remained here until 30 July 2005 , when he went on holiday to Italy for four weeks, returning at the end of August. On 12 August, he disposed of a block of shares, realizing a gain on which the capital gains tax charge was £96,499.60. When he returned from Italy at the end of August, he took up employment with a company in the UK. He claimed that he did not become UK resident until the end of August; his stay in the UK during July was part of his normal holiday arrangement. During that stay, he arranged to take a lease on a UK property. HMRC 6, the publication dealing with residence, states:

Issue: The Issue was whether Taxpayer was a resident in UK and liable to capital gains tax; the Brief facts were that; the taxpayer returned to the UK having spent many years abroad, working in Japan.

Held: It was held by the tribunal that the circumstances were that the taxpayer had decided to remain in the UK prior to 30 July, when he left • for his holiday and was UK resident when the shares were disposed of on 12 August

5 OECD Model Convention, Article 14 6 In Afrika Mashariki Gold Mines Ltd V Commissioner General TTLR 3 (2005) Brief Facts: The appellant is a limited liability company dully registered under the Companies Ordinance Cap. 212. Initially the appellant had

been registered in the name of East African Gold Mines Limited but changed to Afrika Mashariki Gold Mines Limited after discovering that there was another company incorporated under the same name. The composition ofthis company by the time of the dispute consisted of two shareholders namely East African Gold Mines (Australian Company) holding 1,184,461 ordinary shares and secondly Mr. Godfrey Hugh Stewart, holding only one ordinary share. In 2003, a Canadian Company known as Placer Dome Inc. went into public takeover bid of the Australian Company (East African Gold Mines Limited) and bought the majority shares in the Australian company. When this fact was brought to the attention of the respondent through a local newspaper to the effect that the Australian Company's shares in Australia had been acquired by Placer Dome Inc., the respondent demanded to be furnished with a contract of the sale of shares for the purposes of raising from the appellant capital gains tax under section 13 of the Income Tax Act, 1973 and stamp duty as per section of the Stamp Duty 1976. The counsel for the appellant argued that the Australian Company had no shares to sell and did not receive any payment because it was the shareholder who sold out shares; therefore it was not liable to pay capital gains tax arising out of a non-existent transaction. Secondly, the respondent failed to establish that the seller was an owner of financial assets owned in the URT and that these assets were sold. Thirdly, since the sale of shares took place outside the URT between two foreign companies then section 5 of the Stamp Duty Act could not stand as the instrument did not relate to property found in Tanzania nor was it executed in Tanzania. The counsel for the respondent maintained that there was a transaction of sale of shares and the transaction related to property situated in Tanzania, therefore the respondent was entitled to demand the payment of capital gains tax on whatever gains realized there-from in accordance with section 13(1) of Income Tax Act 1973 and stamp duty under section 5 of Stamp Duty Act 1976 as well as item 60.

Issues: Stamp Duty; Whether Instruments not relating to property in the United Republic executed outside the United Republic are subject to stamp duty

Capital Gains Tax; whether the sale can only be chargeable to capital gains tax if the financial asset sold is owned in the United Republic and whether a non-resident person owning assets outside the United Republic is not chargeable to capital gains tax

Held: It was held inter alia that in tenns of section 13 read together with section 3(1) of the Income Tax Act 1973, any person who sells any financial asset owned by him in Tanzania then the difference between value of consideration for which such financial asset is sold and its adjusted cost that has not been claimed as deduction in respect of capital expenditure will be deemed to be capital gains income on such person accrued or derived from the United Republic in the year of income it takes place. A non-resident person owning assets outside the United Republic is not chargeable to tax both under section 3(1) (b) as read together with sections 3(2) ( e) and 13(1) of the Income Tax Act 1973; and that since it has

The National Board of Accountants and Auditors ~~",-' .~

~.:.:.'r~: ~

"A.r • •

Page 4: The Fiscal Analysis on Capital Gains Taxing Rights

Statement of the Problem

Journal Vol. 31, Issue 2

April - June, 2014

Tanzania is losing capital gains tax revenue not only due to tax evasion, capital flight and profits laundering by mining companies but also "due to inefficient and ineffective administration in the mineral tax regime in particular, thereby preserving room for an increasing trend of offshore sale of shares without paying capital gains tax."

"Foreign mining companies operating in Tanzania have exclusive ownership of their operations, and while looking at the minerals recovered they have complete power to dispose such minerals as they wish, including to transfer rights such as shares to other companies, without incurring capital gains tax" (Curtis & Lissu (2008, p. 15). Likewise, the case of Afrika Mashariki Gold Mines Ltd V Commissioner General TTLR 3 (2005) astoundingly opened Pandora box on the dilution of taxing rights with regard to the capital gains on offshore sale of shares.

It is worth noting that, the control of ownership which would provide taxing rights for Tanzania, on sales of shares have not been possible to be exercised because Stamp Duty Act Cap. 189 attain its application within local jurisdiction while on contrary; most sales of shares by multinational companies are executed outside Tanzania. It is also not possible in the collection of capital gains tax on realization of assets where there are no DTAs that could otherwise provide taxing rights.

BRIEF LITERATURE REVIEW

Economic Allegiance of Income

The League of Nation Report (1923) identified four elements that would constitute economic allegiance of income as follows;

Origin or economic location

Stock in companies or other associations was thought to have a closer connection with the residence of the stockowner than with the origin of income from stock especially when residence was frequently consistent with the remaining elements. They had to provide taxing rights to country of residence.

The origin is only important when it represents the place where income was physically or economically produced. Even though it may be possible to split the income source between the origin and residence, residence is considered the predominant element to economic allegiance in corporate stock, i.e. it is more appropriate to be used for source attribution. Elements (a) - (c) in combination are generally regarded as the basis of the tax jurisdiction of source countries, while element (d) concerns residence countries (League of Nations 1923 Report (1920s). However, the Report could not be able to substantiate to what extent residence countries with double residential status accommodate fully the taxing rights.

League of Nations 1923 Report (1920s) went further on pointing out that, if the origin of income from corporate stock were economically derived from multiple countries, the claims by different origin countries would trigger big disarray. As to the capital gains from stock sales by non-residents, policy and administrative convenience concerns in exercising the right to tax can create exceptions to this economic allegiance to origin countries. Origin has some significance when the location where the stock is registered with enforceability of legal protection, coincides with the place of origin. However, the Report has not been able to provide the actualization of the term origin as to mean the place where assets is situated or the place where registration took place.

been proved that the seller of the financial assets in question is a non-resident person and the said asset is not owned in the United Republic, the transaction is not chargeable to capital gains tax as per section l3(\) of the Income Tax Act 1973

~'" G"li:

The National Board of Accountants and Auditors

• i};. '~.'

. ,~.~i·

~ ....

Page 5: The Fiscal Analysis on Capital Gains Taxing Rights

Journal Vol. 31, Issue 2

April - June, 2014

Physical situs

Physical location of the stock constitutes little economic allegiance in the capital gains of stock sales. Situs of title passage rule was once adopted by the U.S. in determining the source of stock sales, in accordance with the general title passage rule for source attribution of personal property sales.

In the Mr. Mitchell B. Carroll (1933) Study, in light of international tax law development after the 1928 Draft, outlines that, the problem of allocation is not limited to business profit, but should consider the sale of capital assets as well, whether they were real or personal property. Following the source rule practice of the majority of countries at that time, it provides definition of the situs that" situs is the source of income from the purchase and sale of real estate while the country in which the sale takes place is the source of income from the purchase and sale of securities or other intangible personal property"; However, that study could not be able to quantify the taxing rights of capital gains on sale of capital assets.

In the case of CIR v Lever Brothers and Unilever Ltd (1946 AD 441F, it was held inter alia that, "the source of receipts, received as income, is not the quarter where they come, but the originating cause of their being received as income, and that this originating cause is the work which the taxpayer does to earn them, the quid pro quo which he gives in return for which he receives them". Further case law made it clear that once this originating cause is established it should be allocated to the appropriate source location to determine the source of that income.

In the Sweden - U.S. tax treaty 1939 speculative capital gains of non-residents were taxable only if such gains were derived from real property in Sweden, which is consistent from the source rule. However, the Tax treaty has not been able to preserve taxing rights on the gains derived from real property outside Sweden.

Enforceability of rights to wealth

Stephen E. Shay (2009) argues that, when stock registration is required to protect a stockowner 's right, enforceability is important as to economic allegiance. Sometimes the country of origin coincides with the country of stock registration; thus each element reinforces the importance of the other. However, he didn't come with analysis onto the enforceability of economic allegiance with respect to the country of residence so as to preserve taxing rights of the either parties.

Residence or domicile

In the early history, the residence of both individuals and corporate taxpayers were relatively stable. The economic analysis was also based on the assumption that all the capital gains from the stock sales would eventually flow to the ultimate owner, who has the discretion to consume or dispose or reinvest. If this assumption held, the residence of the ultimate stockowner dominated such discretion

7 In CIR v Lever Bros & Unilever Ltd 1946 AD 441, 14 SATC 1 Brief Facts: To protect certain American assets held by Unilever in Holland at the outbreak of the Second World War, a South

African company was formed, which acquired shares in the United States companies as well as the related loan account, which arose when the Dutch company itself acquired the American shares from Lever Brothers in the United Kingdom (UK). The South African company therefore received dividends from America and used these dividends to pay the interest on its loan account to Lever Brothers UK. The Commissioner for Inland Revenue said that the interest, which

Held: accrued to Lever Brothers UK, was from a South African source.

The source or originating cause of interest payable on a loan of money was not the debt but the services that the lender performs to the borrower, namely, the supply of credit, in return for which the borrower pays him interest. An investor in interest-bearing securities is in all respects the same as a lender of money as he is paid for the services that he performs to the borrower, being the supply of credit. Thus the true source of interest from an interest-bearing security is, in terms of the Lever Bros case, also the provision of the credit. This would be the place where the money for the investment was actually handed over. Therefore non-residents making investments in interest-bearing securities in the Republic will cause the resulting interest to be from a Republic source.

The National Board of Accountants and Auditors

Page 6: The Fiscal Analysis on Capital Gains Taxing Rights

--Journal

Vol. 31, Issue 2

April - June, 2014

There was no obvious reason other than the administrative concerns that residence, rather than the origin should be the predominant element in connection with economic allegiance in the capital gains from stock sales. This conclusion differs from the conclusion ofthe 1923 Report which focuses on the income from stock rather than that from stock sales, which are not necessarily the same.

Following Carroll's 1940 Draft, the source rule for capital gains from the sales or exchange of capital assets proposed in the 1940 Hague Draft did not change much other than to split the gains from sales or exchange of personal property other than real property into two paragraphs: Article 12(2) business property and Article 12(3) other capital assets. Notably, Article 12(3) of the 1940 Hague Draft refers to the applicable source rule as "in conformity with the provision of Article 12", i.e. literally the article itself. Therefore, Article 12(3) does not explicitly provide an answer to the source rule for capital gains from sale of other capital assets. This provision created an ambiguous circle when one tries to understand what should be specifically applied.

The 1940 Mexico Draft made some minor amendments to Article 12(3) to address the above ambiguity by attributing the exclusive right to tax to the "state of the fiscal domicile of the recipient Due to World War II," In the 1943 (1940) Mexico Draft was mainly negotiated by the countries in the Americas, including many less-developed Latin American countries, like Argentina, Peru, and Chile (Fiscal Committee, 1945).

Latin American countries still wanted to reserve against the broad catchall capital gains provision of Article 12(3) of the 1940 Mexico Draft which attributed the exclusive right to tax to the "state of the fiscal domicile of the recipient" (Fiscal Committee, 1946). In fact, Chile and Mexico, as OECD members, still made reservations to the 2010 OECD Model Tax Convention on capital gains from certain sales or exchange of resident companies' stock. After World War II, European countries reviewed the 1943 Mexico Draft in which source countries were able to reserve the right to tax capital gains therein. Mexico was the only Latin American country which participated in the • negotiation. The Fiscal Committee under the League of Nations acknowledged apparently different membership of the group negotiating the 1943 (1940) Mexico Draft and the 1946 meetings in London, but also believed that work done before "could be usefully reviewed and developed by a balanced group representing capital importing and capital-exporting countries and from economically-advanced and less advanced countries" when the League of Nations transitioned its work to the United Nations (London Report, 1946).

Unsurprisingly, the 1946 London Draft recovered Article 12(3) of the 1940 Mexico Draft, attributing the exclusive right to tax capital gains from capital assets other than real property and business property to the country in which the recipient had his "Fiscal domicile" .

After the OECD officially superseded the OEEC in 1961, the work expanded to the elimination of double taxation among more member countries. Nevertheless, at least in the capital gains tax area, the spirit of the 1946 London Draft has never gone far away from the subsequent versions of the OECD Model Tax Convention on Income and on Capital. The traditional catchall rule favoring the residence country since 1940 still can be found in Article 13(5) of the 2010 OECD Model.

Surrey (1980) argues that, there are two types of capital gains from stock sales. The first type is sale of stock directly or indirectly representing a real property interest in the situs country of the real property, which in substance is a traditional sale of real property (U.N. Model, 1980). Capital gains from this type of stock sale should be sourced to the situs country of the real property without much dispute. The second type is sale of stock representing a certain percentage of participation in a company, which is a resident of the source country. Many developing countries actually advocated the right to tax the gains from the sale of stock of a resident company regardless of whether the sale took place within their territories. However, Surrey (1980) did not show the generation of capital gains tax where this research aims at filling such a gap (see table 1 and 2).

The National Board of Acrountants and Auditors

Page 7: The Fiscal Analysis on Capital Gains Taxing Rights

Journal Vol. 31, Issue 2

April- June, 2014

Sale, Transfer or Conveyance of Immovable or an Incorporeal Property

The common law requirement for the transfer of ownership in immovable property is effected by means of registration (section 16 of the Deeds Registries Act 47 of 1937; Van der Merwe 1989; Van Jaarsveld et aI1992). An incorporeal asset, for example a share, is actually the right in and to the asset (Van der Merwe 1989; Meskin, Galgut, Kunst, King and Vorster 1994). In the case of Inland Property Development Corporation (Pty) Ltd v Cilliers (1973), the court held inter alia that "in regard to shares, the word 'transfer', in its full and technical sense, is not a single act but consists of a series of steps, namely an agreement to transfer, the execution of a deed of transfer and finally the registration of the transfer".

Meskin et al (1994), Van der Merwe et al (1995) in their work argue that various rules apply, depending on whether or not the shares are listed on the stock exchange. The transfer of ownership in shares is articulated by means of cession, independent of the delivery of the relevant documents; the work of Van der Merwe et al (1995) had similar thoughts. Moreover, Van der Merwe (1989) argues that the asset should be capable of being subject to ownership, i.e. it should be res in commercio. Likewise, Kleyn, Boraine and Du Plessis (1987) argue that these are assets that can be privately owned or that can be objects of other real rights. However, these researchers were not able to show the potential of capital gains tax in multinational ventures and taxing rights thereof. This research aims at filing this gap.

Van der Merwe (1989) argues that the transferor should be capable of transferring ownership in order to preserve room for the taxability of capital gains and capacity to contract. A transferee that does not have the necessary legal capacity should be assisted by a person that has proper legal capacity in respect of the transferee. Because a person cannot transfer more rights than he himself has (nemo plus juris-rule), the transferor generally has to be the owner in order for the transferee to acquire ownership, unless the transferor acts with the consent ofthe owner; this is alsq found in the work of Mostert, Joubert and Viljoen (1972). However, Van der Merwe (1989) have not been able to show, to what extent such assistance could enhance compliance relating to the taxing rights on capital gains; this research is expected to fill this gap.

In the case of Weeks & Another v Amalgamated Agencies Ltd (1920) it was held inter alia that the transferor should have the intention to transfer ownership in the asset and the transferee should have the intention of acquiring ownership in the asset and this was also found in the literature by Van Jaarsveld et al (1992); Van der Merwe (1989). However, their findings could not be able to articulate the fact that capital gains on the transfer of assets have to be accordingly collected.

RESEARCH METHODOLOGY

This research paper consists of methods such as analysis, and synthesis and qualitative and quantitative research methods. These methods were used so as to put in place significant results that bear implications in the legal framework. Time-series data from Tanzania for the period of 1998 to 2012 have been developed.

Research Hypothesis

This research paper has two research hypotheses; the Null Hypothesis and Alternative Hypothesis in testing as to whether ITA Cap 332 preserves taxing rights, in that; Hypothesis 1= the Income Tax Act Cap 332 has been able to preserve taxing rights for the mining companies in multinational transactions; and Hypothesis 2= the Income Tax Act, Cap 332 has not been able to preserve taxing rights for the mining companies in multinational transactions. The ANOVA determines P-Value from the F-Statistics by testing these hypotheses. The ANOVA tests on the assumptions that each group is approximately normal and Standard Deviation of each group are approximately

I equal.

=Th=--e--=N,-=-a--:tic-ona---=-' B=-oa-rd7"o--:if=-A-cco-ww-u-nrs-and--=-Au-dito='-rs

'-

Page 8: The Fiscal Analysis on Capital Gains Taxing Rights

Research Modeling in Testing Tax Burden and Optimality Theory

Journal Vol. 31, Issue 2

April - June, 2014

We explore the optimal revenue generation profile in testing as to whether high tax rate on capital gains has been causer for capital gains tax avoidance. In that; let wand x stand for true and declared income respectively. The risk-averse mining company's problem is to maximize its expected utility so as it can maximize the profits through non-payment of the capital gains tax:

ElU]= (1- pp(w-t(x) + PU(w - t(x) - F(t(w) -t(x))) ... .......... .. .......... ..... ....................... (1)

By optimally we have to choose x . In this model P is the likelihood for the mining company involved in evading or avoiding payment of capital gains getting caught, F is the fine rate when (F > 1), and t(x) is a general well­behaved tax function with t'(x) > 0 and t"(x) > O. The symbols 'and" stand for the corresponding first and second derivatives, respectively. The mining company with zero income owes no taxes to the government. It is obvious that the termF(t(w) Dt(x)) stands for the total penalty that the TRAmay impose when mining company in default is caught. Thus, the first-order condition is:

aE[U] = -(1- p P' (Y)t' (x) - pU' (Z)(1- F)t' (x) = 0 ... .. .. ... .. ...... ...... ... .. ......... ........... .... ...... (2) ax

Where Y == w - t(x) and Z == w - t(x) - F (t (w) - t(x)) Expression (2) can be re-written as; - (l -p) U'(Y) - p (I-F) U ' (Z) = 0, which is consonant which could observe that:

a2

E[U] = D = (1 - p )[U' (Y)(t' (X))2 - U' (Y)t' (x) J+ p[U' (Z)(I - F)t' (X)2 + U' (Z)(F -1)t' (x) J aX .. . . ..... .... ... .. . . .. . . . ... ... ... . . .. .. . .. . .... . . . .. .. .. .. . ... .. ... . ... .. . . ...... . .. . . . . . . ..... . .. . ..... ... (3)

Utilizing the first-order condition reduces (3) to :

D = (1- p )U' (Y)(t' (X))2 + pU' (Z)((1- F)t' (x)f ..................... .. .............. ......................... .. . (4')

This is always negative. It is straightforward to show that the conditions for an interior solution can be simplified

as:U'(w) p(F-l) ---< ............................ ........................ ................................................... (5) U(w-F:(w) I-p

pF < 1 .................................................................................................................................... (6)

Equations (5) and (6) are identical to conditions (6')* and (7')*, respectively. From (2) and (3) it can be established that;

dx ((xH ' , ] - = P- lU (Z)(t(W)-t(x))(F -l)-U (Z) >0 ................................................. .. ........... (7) aF D

and ax =_t(x)[U'(Y)+U'(Z)(F -1)]>0 ................................................ ............................. (8) ap D

To find out the relationship between the tax rate increase and declared capital gains, and to consider a non-uniform variation in the tax schedule, present the tax function for the initial amount of declared income and the true income level as t(x) + f(x) and trw) + v(w), wheref(x) and v(w) are the respective income-dependent shift functions. Now, for the sake of illustration takef(x) and v(x) as T x and ET w, respectively, where T is a shift parameter, augmented in the latter case by a constant £:::;1. Therefore, consider now differentiating (2) with respect to T (and then evaluating the result at T = 0), recalling that; - (I -p) U' (Y) - P (I -F) U' (Z) is zero, and performing some algebra, results in the

following; aX I t (x) , {J ] } aF 1=0 = nU (Y)(l- p) .tLRA(Z) - RA(y) + F(w- X)RA(Z) .................................... (9)

, ."~-., ~ _ ~\:"A The National Board of Accountants and Auditors

=-.~ - -=, • . ,""'::;' -~~ .

s. ,." .. -

Page 9: The Fiscal Analysis on Capital Gains Taxing Rights

Journal Vol. 31, Issue 2

April - June, 2014

Where RA (0) == _U" (o)/U'(o) Note that RA (Y) < RA (Z). It follows that (9) is positive. Whereby t'(x) = e, which would also make (9) positive. The sign of (9') is clearly abstruse. Instinctively, when an increase in the tax rate at the taxpayer's optimum is concomitant with a smaller relative rise in the end-point of the tax rate bracket, then total penalty payments essentially decrease at the initial amount of declared income, creating more incentives to tax evasion than before.

EMPIRICAL FINDINGS

Table 4 shows shares of the Government of URT in mineral sector which would have to be affected upon no collection of capital gains tax if had to be sold offshore under the prevailing legal framework and Table 5 and 6 show other portfolio ventures. Tanzania holds shares in five companies with respect to the mines owned by them, two of which are through STAMICO, two through NDC and one directly through Treasury Registrar. In Table 4, Tanzania has lower shareholding interest from Mchuchuma-Liganga Iron Ore under Sichuan Hongda Group Ltd of China while the higher shareholding interest is from Buckleef Gold Resources under Tanzania Exploration Royalty Ltd.

For the entire list of the companies under study, no regulations in place that prescribe the minimum shareholding requirement and procedure of which such companies would be selling shares to the Tanzania nationals, in accordance with the provisions of the Capital Market and Securities Act, Cap 79 offering shares to the public and as stipulated under Section 109 of the Mining Act, No 14 of 2010. Likewise, Tanzania has no control of either of the companies because holds less than fifty per centum by virtue of Section 110(3) (a) (i) despite ofTanzanite One­URT Unincorporated Joint Venture in the Mining Licence No 290 (50%-50%) at Merelani Block C.

Under ceteris paribus, there were capital gains revenue synergies amounting to USD 305,404,121.00 which was' not subjected to the collection due to the absence of taxing rights in the DTAs and ITA Cap 332; and there was also capital loss ofUSD 50,059,245.02 emanated from the disposal ofDTP asset to GGM, this disposal was made with no consideration to the subsidiary company (Table 7). Likewise, Afrika Mashariki Gold Mine filed objection to the court objecting the decision of the tax assessment. TRA failed and has not been able to collect the capital gains tax from offshore sale of shares. In the same vein, Tanzania sought in court $196 million in capital gains tax following Moscow-based ARMZ Uranium Holdi.ng Co. 's acquisition of Perth, Australia-based Mantra Resources Ltd, where Tanzanian owns the Mkuju River uranium project. TRA imposed tax based on the fact that the mine is operating within Tanzania.

ABG absconded to dispose its shares due to lack of due diligence. Through such judicial decisions apart from enactment of the Finance Act, 2012, the taxing rights may not be adequately addressed as legal transfer of shares but it must be stamped in order to justify that ownership has changed. Moreover, Tanzania is still facing problems regarding the exchange of information in tax matters which could possibly obstruct collection of capital gains.

Research Hypothesis-Results

In Table 8 from our Hypothesis testing results, because P-Value of 0.315029 is greater than 0.15 we can conclude that they are significantly different. The best forecasting for each company's capital gains tax would be reflected by the groups' mean ofUSD 197,931,138.90. Hence, the P-Value of 0.315029 indicates that we reject the Null Hypothesis and conclude that the Income Tax Act, Cap 332 has not been able to collect capital gains tax prior to enactment of Finance Act, 2012. Hence, Capital Gains have a significant influence on the capital gains tax. This is supported by the large F Statistic of 1.099 which indicates that there is no capital gains tax collected in offshore sale of shares. Hence, there is more difference between group in favour of Null Hypothesis than within group .

The National Board of Accountants and Auditors : -::'00< . . ~'. . 0 , . -"

Page 10: The Fiscal Analysis on Capital Gains Taxing Rights

Research Modeling in Testing Tax Burden and Optimality Theory

Journal Vol. 31, Issue 2

April - June, 2014

While referring our model in Testing Tax Burden and Optimality Theory; it is hereby concluded that the tax rate on capital gains in Tanzania has been within the industrial average of 0.19 thereby evidencing that 20% has not been the cause for the investor from non-compliance thereby shifting to the tax haven countries. This is reflected from our observation where the distribution is highly skewed at 0.665667647; Kurtosis of -0.54276787 is Platykurtic having Mean of 0.19 (Table 9 and Table 10).

CONCLUSION AND RECOMMENDATIONS

Conclusion

The current laws around capital gains taxation are unfair and reduce the integrity of the tax system and Tanzania's economic efficiency. Capital Gains Tax has dramatically not been collected not only when there are no DTAs or Monitoring and Evaluation but also due to inability of stamp duty Act, Cap 189 to attain taxing rights outside its jurisdiction that would otherwise substantiate legal transfer of assets or instruments.

Recommendation

Moreover, ITA Cap 332 has no specific provision guiding for the capital gains tax in offshore market apart from enacting the Finance Act, 2012; the enforcement mechanism pertaining to the signing the DTAs including more specifically exchange of information on tax matters have been the causer for non-collection of capital gains tax thereby reducing tax net and constricting the tax base. The eventual triumph of a capital gains tax depends on its legal framework and enforcement. As with any government legal structure, we must adopt the taxing rights for achieving perfection just as much as we embrace the positive role that government can play in making revenue motives significantly noble.

LIST OF TABLES Table 1: Conventional Matrix on the Comparative Advantages of the Residence and Source Rules

Serial No

Residence Rule Source Rule

Country seeks to tax all residents on all their income regardless of Capital gain is taxed in the country where the income the source of income i.e. capital gains (Huxham and Haupt 1998: originates, regardless of the physical or legal residence of 13). the recipient of the income (Katz 1997: 1)

Residence Taxpayers and residence counties would be able to Resident Taxpayers and resident countries would mislay encourage international investment and trade and be able to calculations of allowable foreign tax credit resulting to calculate their tax credit adequately. harmful international investment and trade

2 Resident Taxpayers and resident countries may be able to determine Non-resident taxpayers and source countries may not be correct capital gains tax able to determine correct domestic source income that would

yield the capital gains tax resulting to revenue loss

3 It is an imperative model to deal with single element of income Income items do not have single element to source attribution attribution (Reuven S. Avi-Yonah, 2007)

4 Tax is levied only on (the return to) the wealth owned by mining Source based taxes are taxes on investment. Tax is levied companies which are residents in the domestic market disregarding on a source of income or gain only if there is a specific as to whether such wealth is invested at home country or abroad provision taxing that income or gain. The Source principle

will allocate income over a taxing jurisdiction on the basis of the source of the income or asset in that country, regardless of the residence of the taxpayer.

5 Many developing countries including Tanzania, having growing Many developed countries having recession on the capital capital imports, advocated for the right to tax capital gains from imports may not be able to advocate for the right to tax capital stock sales, which was largely reserved by the residence countries. gains from stock sales which could largely be reserved by the

residence countries

SOURCE: Mafwenga H. M (2013)

~

~ .J The National Board of Accountants and Auditors ~.

Page 11: The Fiscal Analysis on Capital Gains Taxing Rights

--- --c-,-I ~

Journal Vol. 31, Issue 2

April- June, 2014

-.. " .~

Table 3: The Chronological Evolution of the Source Rule !.

Period Selected Events

1923 Third Report and the Restatement was issued, the principles of source attribution came largely from the customary international law and practice.

1940 The source rule was legitimately introduced to the international tax world by the League of Nations.

~ A formal approach and a substantive approach in jurisprudence were introduced in order to address complexity

,~r' in taxability. The formal approach focused on policy certainty and administration convenience by including mainly passive and investment income over which a taxpayer has little or no control. The substantive approach

-aimed to ascertain the economic substance of the income by including mainly active income over which a

.~ taxpayer has active control.

1946 The Draft Model Convention gave rights to the residence countries to tax capital gains in as proposed by the League of Nations in London (hereinafter known as the " 1946 London Draft") in the absence of most source country representatives. As a result, capital gains became taxable only in the residence country of the recipient.

~~~, 1963 - The 1963 Draft Double Taxation Convention on Income and on Capital proposed by the OECD (hereinafter known as the "1963 OECD Model") adopted the same source rule. Later on, many developing countries, having

Ir "" ... / growing capital imports, advocated for the right to tax capital gains from stock sales, which was largely reserved by the residence countries.

1980 The Parties opposing a source taxation rule and those accepting it reached a temporary compromise in the 1980 United Nations Model Double Taxation Convention between Developed and Developing Countries (hereinafter

-lOS ~~ known as the "1980 U.N. Model"). Article 13 of the 1980 U.N. Model provided the source country with great

~~~ discretion in stipulating domestic rules for taxing gains from stock sales, and as a result, many countries taxed capital gains from stock sales by nomesidents, including some indirect stock sales.

1981 Introduction of New Source Rule in US. Model, 1981

~.::.

.~~T:

I

Ii

~ Ivfji

2003 Special Source Rule was Introduced by the OECD Model, in the situs countries

2000-2008 The Tanzania-Agreements on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Income Tax with Egypt, Iran, India, Russia, England, Canada, South Africa, Botswana(To mention the few)

i adopted the Source Rule under ITA Cap 332

SOURCE: Mafwenga H. M (2013)

Table 4: Shares of the Government of the URT in Mineral Sector.

Mining Project M a j 0 r i t Y Shares % U R T - Shares % Shareholder Through

Buckleef Gold Tanzania Exploration 55% STAMICO 45% Resources formally Royalty Ltd listed

:~I ~ Mwadui Diamonds at TSXI Tanzania Deposits American International

Development 2000

Mchuchuma & Sichuan Hongda Group 80% NDC 20% Liganga Iron Ore Ltd .-:;..

Ngaka Coal Tancoal Energy Ltd 70% NDC "- 30% Reserves owned by Intra Energy

listed at ASX

Williamson Petra Diamond Ltd listed 75% STAMICO 25% Diamonds atLSE

Mbeya Cement Coy subsidiary of the Lafarge 65% Treasury 25% 35% Ltd Group and NSSF

10%

Tanzanite One URT & TanzaniteOne 50% STAMICO 50% Mining Ltd Mining Ltd

.. -It. /"

Source:

Country of Origin an d Types of

Structure

Canada (Acquisition of Share s)

China (Merger into Ta nzania China es Ltd) International Mineral Resourc

Australia (Acquisition of Shar es)

Bermuda (Acquisition of Sh ares from De Beers Ltd)

France (Acquisition of Shares

Joint-Venture (Shareholding interest on Mining License)

Mineral Tax Clinic-The Reflection of Old and New Fiscal Regimes for Effective Tax Auditing in Tanzania (Mafwen ga H.M2012)

The National Board of Accountants and Auditors 34

Page 12: The Fiscal Analysis on Capital Gains Taxing Rights

l

Table 5: Other Investments under Joint Ventures

Journal Vol. 31, Issue 2

April - June, 2014

No. Project Mineral Iv Partner

Itetemia I Gold Prospect Gold Tancan Mining Company Ltd Resource of over 500,000 Ounces of gold delineated in the horse shoe reef

2 Buhemba Gold Prospect Gold

5 Kiwira coal project Coal

Source: State Mining Corporation (STAMICO 2013)

Table 6: Available Mineral Properties for Ventures

No. Prospect Location Area

{Km2}

I Busanda Gold Geita 7.98 Prospect

2 Itetemia II Far East Kahama, 8.573 Gold Prospect Shinyanga

3 Uranium Sengeri Mbeya l.l8 Prospect

4 Mahene Gold Prospect Nzega, Tabora 48.49

5 Uranium Makutopora Dodoma 46

Source: State Mining Corporation (STAMICO 2013)

Manjaro Resource Pty Ltd Processing of tailings and feasibility study on hard rock within license area

underway

IV partnership being sought Resource of 35.0 Million tones available

Jf ~~~J i ~.:-~

Mineral ~ ~~7' ;;r~ Status ~'"- ~

Gold I , Geological mapping, soil geochemical sampling

Gold Geological mapping, soil geochemical sampling

Uranium Regional exploration mapping and sampling programme undertaken

Gold Preliminary exploration by TANZAM 2000 has indicated potential for gold mineralization

Uranium Surface geological mapping, rock sampling, geochemical sampling undertaken and lab tests

have returned encouraging results

Table 7: Capital Gains Revenue Synergies Analysis (In USD and Number of Shares)

Serial Acquired Company Original Owner Acquirer Company Amount of Revenue Synergies No (A) (B) (C) Acquisition (in USD! (Capital Gains) (in

TZS/uSD) USD) (D) E=D*20%

1 Mantra (T) Limited URT(100%) ARMZ Uranium Holding 980,000,000.00 196,000,000.00 Coy

2 Afrika Mashariki Gold Placer Dom 100% Barrick Gold Corporation 252,400,000.00 50,480,000.00 Mines 100%

3 WDL (De Beers) De beers (75%): URT /;' Petra 75% 10,000,000.00 2,000,000.00 (25%)

4 SAMAX(DTP) SAMAX Resources 1 GGM (91,578,475.71) (50,059,254.02) Ltd

5 Nyanza Salt Mines URT (100%) Solid Namac Taam Sirjan Euro 151,860.00(TZS ,

49,924,112.00 , (pure Vacuum Drier Coy (100%) 262,976,000.00)

4,1( (PVD) I

6 Kahama Gold Mine URT (100%) then Barrick Gold Corporation 5,000,000.00 1,000,000.00 1"\

Ltd (15% pari pasu) (Bulyanhulu Mine) 100%

1'1 7 Buckleef Gold URT (STAMICO Tanzania Royalty 30,000,000.00 6,000,000.00 Resources (Mwadui 45%) Exploration Corporation Diamonds Deposits) I (55%) ~~, ,~.,\

TOTAL CAPITAL 305,404,121.00 GAINSILOSSES

Source: Ministry of Energy and Minerals (2013) Currency converted using spot rate as of the date of transfer

The National Board of Accountants and Auditors

Page 13: The Fiscal Analysis on Capital Gains Taxing Rights

Journal Vol. 31, Issue 2

April- June, 2014

Table 8: ANOVA single factor results on hypothesis testing

Anova: ~ 1 ,'I Single Factor Ij.':.:.~ // ,1:;.0.

SUMMARY I //~

Groups Count J

Sum Average

Capital Gains 7 1,385,517,972.29 197,931,138.90 (Group 1)

Capital Gains Tax \\ 7 355,463,366.02 50780480.86 (Group 2)

ANOVA '~ "0"" ,)'-'

Source of Variation SS df - ,0

MS Between Groups 7.57866E+16 1 7.57866E+16

Within Groups 8.27112E+17 '~', J/ 12 6.8926E+16

Total 9.02898E+17 ..'J ,-

13

•. : -

Variance

1.33193E+17

4.65883E+15

,I

F

1.099535997

I

Table 9: Comparative Capital Gains Tax Rate in Selected Countries

:.-- - --:r --,-. "'-- - - 1

~ "'--- - - ~ • .. ~#

\ ,

r~"" -.

" .... :/

~ .;- ~ ,- ,~.

"\ ,

f J/ ~

~

>. / P-value F crit

0.315029 / 4.747225336 ..... ~ ~

.' ;~' --.. -

/" I

Table 6: COMPARATIVE CAPITAL GAINS TAX RATE IN SELECTED COUNTRIES 0.55

0.50

0.45

0.40 W I- 0.35 « It: 0.30

>< 0.25 « I-

0.20 C/)

Z 0.15 <C (!) 0.10 ...J « 0.05

~

f /

f'.. / "- /

"'-.... / ~ / I / ~ / I / ~ /1 /. ~ -" 1/

----- / Y

= COVA RIAN C ES

- VAR IAN C ES

Q.

« (O.Q~ U

~) ~- (0.15)

(0.20)

\ / ;..~ iF .",' ~I" ~'O'v ; " .:..,.v ,AI"''' ~9~- _~oQV' .J.e~"i _~v ~..,

~\~ "'-~- ,,~ fS t::/'" ~ r.:I"v +'t;. ~ V" tji'-

\/

-+- '*'

(0.25)

COUNTRIES

Table 10: Descriptive Statistics from the Data Analyzed in Table 6

Descriptive Statistics from the Data Analyzed in Table 6

Mean 0.19

Standard Error 0.044507891

Median 0.15

Mode 0

Standard Deviation 0.172378321

The National Board of Accountants and Auditors ,,~~:f" -~ • . ... " ,

~-::..

~~ ..

Page 14: The Fiscal Analysis on Capital Gains Taxing Rights

Sample Variance 0.029714286

Kurtosis -0.542767837

Skewness 0.665667647

Range

Minimum

Maximum

Sum 2.85

Count 15

Confidence Level (95.0%) 0.095459932

REFERENCES

Clerk of the National Assembly (ITA CAP 332 R.E 200B) "Income Tax Act, Cap 332"

Journal Vol. 31, Issue 2

April - June, 2014

Curtis et al (200B, p. 15), 'F\ Golden Opportunity; How Tanzania is falling to Benefit from Gold Mining"

Fiscal Committee, (1945), "Model Bilateral Conventions for the Prevention of International Double Taxation

and Fiscal Evasion", Second Regional Tax Conference, Mexico, D.F., July 1943, Series of League of Nations

Publications II. Economic and Financial Official No C.2.M.2 1945.II.A

Fiscal Committee, (1946), "London and Mexico Model Tax Conventions Commentary and Text 69 Series of

League of Nations Publications II" Economic and Financial Official No.: C.BB.M.BB.1946.II.A.

http://www.investopedia.com/terms/c/capital_gains_tax.asp (Accessed on 3rd June, 2013)

Huxham, K. & Haupt, P. 199B. Notes on South African Income Tax; Constantia: Hedron Tax Consulting and

Publishing CC.

Katz, M.M. 1997. The fifth Interim Report of the Commission of enquiry into the tax structure of South Africa.

Pretoria. Government Printer

Kleyn D.G, Boraine, A. and Du Plessis, W. (19B7) "Silberberg and Schoeman's -The Law of Property",

Butterworths, Durban

London Report, (1946) "Model Convention on the Avoidance of Double Taxation and Prevention of Fiscal

• -r_:&1)

~~ NtJtional Board of ACI!Ountants and Auditors

-;:r-.~

I , ")

Page 15: The Fiscal Analysis on Capital Gains Taxing Rights

Sample Variance 0.029714286

Kurtosis -0.542767837

Skewness 0.665667647

Range 0.5

Minimum

Maximum

Sum

REFERENCES

Clerk of the National Assembly (ITA CAP 332 R.E 200B) "Income Tax Act, Cap 332"

Journal Vol. 31, Issue 2

April - June, 2014

Curtis et al (200B, p. 15), "A Golden Opportunity; How Tanzania is falling to Benefit from Gold Mining"

Fiscal Committee, (1945), "Model Bilateral Conventions for the Prevention of International Double Taxation

and Fiscal Evasion", Second Regional Tax Conference, Mexico, D.F., July 1943, Series of League of Nations

Publications II. Economic and Financial Official No C.2.M.2 1945.II.A

Fiscal Committee, (1946), "London and Mexico Model Tax Conventions Commentary and Text 69 Series of

League of Nations Publications II" Economic and Financial Official No.: C.BB.M.BB.1946.II.A.

http://www.investopedia.com/terms/c/capitaLgains_tax.asp (Accessed on 3rd June, 2013)

Huxham, K. & Haupt, P. 199B. Notes on South African Income Tax; Constantia: Hedron Tax Consulting and

Publishing CC.

Katz, M.M. 1997. The fifth Interim Report of the Commission of enquiry into the tax structure of South Africa.

Pretoria. Government Printer

Kleyn D.G, Boraine, A. and Du Plessis, W. (19B7) "Silberberg and Schoeman's -The Law of Property",

Butterworths, Durban

London Report, (1946) "Model Convention on the Avoidance of Double Taxation and Prevention of Fiscal

I . ..... '. I • "":,j,,' .' I ~:;,.¥. I _:_

The Natiofllli Board of Accountants and Auditors !.~

I . .;""j • ., - ., .. ~ ... ,-'

Page 16: The Fiscal Analysis on Capital Gains Taxing Rights

Journal Vol. 31, Issue 2

April - June, 2014

Evasion"

Meskin, P.M., Galgut, B., Kunst, J.A., King, J.C. and Vorster, Q.et al (1994), "Henochsberg on the Companies

Act Vol 1", 5th edition, Butterworrths, Durban

Mafwenga, M. H "Mineral Tax Clinic-The Reflection of Old and New Fiscal Regimes for Effective Tax Auditing in

Tanzania"-Dar-Es-Salaam University Press (2012)

Mgimwa William et al (2012): "the Finance Act, 2012"

Ministry of Finance (2004) "Tanzanian Model on the Agreements for the Avoidance of Double Taxation and

Prevention of Fiscal Evasion"

Mitchell B. Carroll, (1933), "Methods of Allocating Taxable Income", in Series of League of Nations Publications

II. Economic and Financial Volume IV of Taxation of Foreign and National Enterprises, C.425 (b).M.217 (b)

Mostert, D.F., Joubert, D.J. and Viljoen, G. (1972), Die Koopkontrak, Butterworths, Durban

Newman, E and McQuid-Mason, D.J. (1978), "Lee and Honore's - The South African Law of Obligations",

Butterworths, Durban

Organization for Economic Cooperation and Development (R.E 2002)

Organization for Economic Cooperation and Development (R.E 2010) 'Tax and Development Practical Guide on

Exchange of Information for Developing countries"

. Reuven S. Avi-Yonah, (2007a), "International Tax as International Law": An Analysis of the International Tax

Regime.

Reuven S. Avi-Yonah, (2007b), "Tax Competition, Tax Arbitrage and the International Tax Regime" University of

Michigan School of Law (US)

Shi Xunjie (2012), "Source Rule for Capital Gains from Stock Sales: History and Evolution". Harvard Law School

(US)

South African Revenue Services (2002) "Draft Comprehensive Guide to Capital Gains Tax", Pretoria.

The National Board of Accountants and Auditors

Page 17: The Fiscal Analysis on Capital Gains Taxing Rights

Journal Vol. 31, Issue 2

April- June, 2014

Stephen E. Shay, (2009) "Commentary Ownership Neutrality and Practical Complications" 62 Tax L. Rev. 317,

320-21 (2009)

Stanley S. Surrey, (1980), "United Nations Model Convention for Tax Treaties between Developed and

Developing Countries": A Description and Analysis 47 (1980).

Tax Justice (2013), "Why Tax Havens Cause Poverty "Tax Justice Network - Research Network (UK)

Van der Merwe, C.G. (1989), Sakereg, 2nd edition, Butterworths, Durban (ZA)

Van der Merwe, J.G et al (1995), "South African Corporate Business Administration", Juta & Co., Cape Town.

Van der Merwe, N.J . and Olivier, P.J .J. (1976), "Die Onregmatige Daad in die Suid-Afrikaanse Reg, 3rd edition,

J.P. van der Walt & Seun (Pty) Ltd., Pretoria.

Van Jaarsveld, S.R et al (1992) "Suid-Afrikaanse Handelsreg", Vol 1 , 3rd edition, Lex Patria, Johannesburg

Vienna Convention of the Law of Treaties (1969) Vienna "the reflection of the Model and its Commentary'

The National Board oj Accountants and Auditors


Recommended