Tag: Back to back arrangement
A transaction with a third party as an intermediate – e.g. a third party agrees to provide a loan to a MNE subsidiary on the premise that the MNE parent loans an equal amount to the third party.
/ Back to back arrangement, Commercial justification, Commercially Irrational Transactions, Delineation - Substance over Form, Isle of Man, Non-Recognition and Recharacterisation, Sasol, Simulated transactions, Tax Avoidance Schemes
The South African Supreme Court of Appeal, by a majority of the court, upheld an appeal against the decision of the Tax Court, in which it was held that contracts between companies in the Sasol Group of companies, for the supply of crude oil by a company in the Isle of Man to a group company in London, and the on sale of the same crude oil to Sasol Oil (Pty) Ltd in South Africa, were simulated transactions. As such, the Tax Court found that the transactions should be disregarded by the Commissioner for the South African Revenue Service, and that the Commissioner was entitled to issue additional assessments for the 2005, 2006 and 2007 tax years. On appeal, the Court considered all the circumstances leading to the conclusion of the impugned contracts, the terms of the contracts, the evidence of officials of Sasol Oil, the time when the contracts were concluded (2001), and the period when Sasol Oil may ... Continue to full case
/ Back to back arrangement, Commodity Transactions, Delineation, Fraus legis, Isle of Man, Marketing hubs, Oil trading, Penalty, Sales and Marketing Hubs, Sasol, Scam, Substance over form, Tax avoidance, Tax Avoidance Schemes
The taxpayer is registered and incorporated in the Republic of South Africa and carries on business in the petrochemical industry. It has some of its subsidiaries in foreign jurisdictions. Business activities include the importation and refinement of crude oil. This matter concerns the analysis of supply agreements entered into between the XYZ Corp and some of its foreign subsidiaries. It thus brings to fore, inter alia the application of the South African developing fiscal legal principles, namely, residence based taxation, section 9D of the Income Tax Act 58 of 1962 and other established principles of tax law, such as anti-tax avoidance provisions and substance over form. Tax avoidance is the use of legal methods to modify taxpayer’s financial situation to reduce the amount of tax that is payable SARS’s ground of assessment is that the XYZ Group structure constituted a transaction, operation or scheme as contemplated in section 103(1) of the Act. The structure had the effect of avoiding liability ... Continue to full case