Academic literature on the topic 'Impermissible avoidance arrangement'

Purpose A taxpayer who gets caught under Part VII of the Mauritius Income Tax Act is subjected to a corrective measure only in the form of payment of the amount of tax that would have been due in the absence of the avoidance arrangement, but the consequences set out in the same section do not result in any disincentive to the taxpayer that would ensure the prevention of the occurrence of such type of anti-avoidance practices in the future. This study aims to investigate the effectiveness of the anti-avoidance provisions in the Mauritius legislation as a weapon against impermissible tax avoidance, and the study also intends to critically analyse the remedies available against taxpayers who enter into impermissible tax avoidance transactions. Design/methodology/approach The methodology adopted for this qualitative study consists of a critical analysis and comparative legal review of the relevant legislation, case laws and literature. The anti-avoidance provisions of the Mauritius legislation will be compared with similar provisions of legislations of countries that have rigid preventive rules for anti-avoidance practices, and the selected countries are the UK and Australia because each country has been successful in diminishing the tax avoidances practices further to the imposition of penalties for impermissible tax avoidance. The black letter approach will also be used through which existing legal provisions, judicial doctrines, scholar articles and budget speeches governing anti-avoidance provisions for each country identified will be analysed. Findings Further to an analysis of the substantial differences between Mauritius anti-avoidance legal provisions and those of the UK and Australia, it is found that the backing of corrective actions by penalties act as a disincentive to prohibit impermissible anti-avoidance practices. The study concludes that, where there is abuse of law, the law needs to provide for penalties that must be suffered by the abuser, and hence, the study calls for an amendment in the Mauritius Income Tax Act to strengthen anti-avoidance provisions, by adopting similar provisions of the laws of Australia and the UK. Originality/value At present, there is no Mauritius literature on the researched topic, and this study will be one of the first academic writings on the subject of penalties for impermissible tax avoidance in Mauritius. The study is a new and unique topic in Mauritius, and for that reason, the study will largely rely on foreign sources that deal with penalties for impermissible tax avoidance, and this will include the Australian Taxation Administrative Act 1953, Australian case laws and the UK Finance Act 2016. This study is being carried out with the view to provide insightful recommendations to the stakeholders concerned in Mauritius to enhance the revenue collection avenues and methodologies for the Mauritius revenue authorities.

South Africa has adopted a general anti-avoidance rule (GAAR) as one of the methods to combat the innovative tax avoidance schemes into which taxpayers may enter. Nevertheless, since its introduction it has undergone numerous amendments due to weaknesses highlighted by its failures in court. Yet, since its most recent amendment in 2006, the efficacy of the South African GAAR has not been established as it has not been tested in the courts. This study addresses this concern by employing a ‗structured pre-emptive analysis‘ to identify the weaknesses of the South African GAAR when compared to its New Zealand counterpart. This approach is essentially qualitative and combines the typical doctrinal or black letter law approach used in law with that of reform-oriented approaches. Firstly, the South African and New Zealand GAARs were analysed and compared using a doctrinal approach to gain an understanding of the interpretation and application of the two GAARs. This allowed for the identification of weaknesses in the South African GAAR, whilst also making suggestions for its improvement. Thereafter, the South African GAAR was applied to the facts of a case from New Zealand by making use of a reform-oriented methodological approach. In applying the South African GAAR to the facts of the case, a framework of the South African GAAR was used to enhance the reliability of the findings by reducing subjectivity and improving replicability. The findings from the doctrinal and reform-oriented approaches revealed the weaknesses in the current South African GAAR when compared to its New Zealand counterpart. These weaknesses may be addressed in three ways. Firstly, guidance should be provided in order to address uncertainties in the interpretation and application of the South African GAAR so as to prevent inconsistencies that may limit its efficacy. Secondly, the purpose requirement and tainted elements could be consolidated into one requirement, where the presence of one of the tainted elements informs the objective purpose of the arrangement. Thirdly, the purpose requirement should be amended so that it need not be the sole or main purpose, but rather should be one of the purposes, provided it was not merely incidental. It is acknowledged that while the South African and New Zealand GAARs are directed to achieve the same end, the proposals for amendment would arguably go some way towards improving the efficacy of the South African GAAR.
Mini Dissertation (MCom (Taxation))--University of Pretoria, 2020.
Taxation
MCom (Taxation)
Unrestricted

Paying tax is considered a pain for most citizens. These citizens will therefore as far as possible try to avoid tax. Tax avoidance is where a taxpayer’s tax liability is reduced through legal means by using the provisions of the fiscal legislation to his/her advantage. With tax avoidance and tax planning in mind, taxpayers and their advisors frequently come up with clever arrangements that cause transactions to be more tax efficient. However, a number of these arrangements may venture very close to being impermissible tax avoidance schemes. Impermissible tax avoidance is a term said to be difficult to define because of its unpredictability and characteristic to always change. The problem that arises with curbing it is therefore the fact that there is no universally accepted or accurate definition of it. Nevertheless, in an attempt to curb or control it, revenue authorities have various mechanisms at their disposal. These mechanisms include direct legislation in the form of specific anti avoidance rules that are targeted at specific situations and the general anti-avoidance rule (GAAR) that is generally used against any type of tax avoidance. Indirect measures such as the regulation of tax practitioners and the requirement to report transactions that might lead to the avoidance of tax are also at the authority’s disposal. As of October 2012, reportable arrangements are regulated in s 34 to 39 of the Tax Administration Act 28 of 2011 (the TAA). Arrangements are reportable if they either fall into the specifically defined categories of reportable transactions or if they have certain suspicious characteristics or elements. The provisions in the TAA compel taxpayers who have entered into reportable arrangements to report details of these transactions to the South African Revenue Services (SARS). This research analyses the efficacy of the current South African reportable arrangement system in section 34-39 of the TAA. In this analysis, extensive reference is made to section 35 of the TAA, the provision specifically setting out the reportable transactions. A large part of the study also analyses the reportable arrangement system applicable in the United Kingdom, the Disclosure of Tax Avoidance Schemes (DOTAS) regime. Whether the South African reportable arrangement system is in fact an effective measure to indirectly limit impermissible tax avoidance arrangements is a point to ponder. The legislature enacted five types of arrangements that would become reportable in terms of section 35(1) of the TAA. The questions that can be drawn from this is why the legislature only enacted five specific types of reportable arrangements? Does this mean that impermissible tax avoidance is only targeted by reportable arrangements through five different arrangements? Is tax is only avoided impermissibly in five ways? Finally, is this substantial? The analysis of the South African reportable arrangement system in this study demonstrates that the efficacy of the system against impermissible tax avoidance, and in informing taxpayers of the limits of the right to avoid tax is limited to a certain extent. In support of this assertion, it is argued that all the reportable arrangement regime has served to do is to identify a limited number of targeted areas of suspected avoidance and that negativities are incorporated into the effectiveness of the reportable arrangement system against impermissible tax avoidance. On the other hand, most of the reportable arrangement provisions target transactions that lack commercial substance. The argument that transactions that lack commercial substance is a strong indicator of impermissible tax avoidance is thus also made. The focus on transactions that lack commercial substance was possibly mainly due to the fact that these are the arrangements that are actionable. Commercial substance is also primarily focused on in other reportable arrangement regimes like the United States and the insertion of other aspects of impermissible tax avoidance into the reportable arrangement provisions, such as the elements of ‘misuse and abuse’ and ‘abnormality’, seem to create loopholes and it would be difficult for SARS to take legal action on them.
Mini Dissertation (LLM)--University of Pretoria, 2017.
Mercantile Law
LLM
Unrestricted

A research report submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, Johannesburg, in partial fulfilment of the requirements for the degree of Master of Commerce (specialising in Taxation)
Tax avoidance is the legal utilisation of the tax regime to one's own advantage, to reduce the amount of tax that is payable by means that are within the law. Tax evasion entails taxpayers deliberately misrepresenting or concealing the true state of their affairs to the tax authorities in order to reduce their tax liability, and includes, in particular, dishonest tax reporting (such as declaring less income, profits or gains than actually earned; or overstating the deductions). The revised general anti-avoidance measures were introduced in the Income Tax Act 58 of 1962 ('the Act') on 2 November 2006 in the form of section 80A to 80L, in order to replace the complicated and confusing as well as ineffective anti-avoidance measures contained in section 103(1).
AC 2018