Deductibility of value added tax on costs incurred to raise share capital : a critical analysis of the ITC 1744 case
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Date
Authors
Van der Zwan, Pieter
Stiglingh, M. (Madeleine)
Journal Title
Journal ISSN
Volume Title
Publisher
Pretoria University Law Press (PULP)
Abstract
Maatskappye gaan dikwels wesenlike kostes aan by die uitreik van aandele
om bedrywighede te finansier. Tans voer die Suid-Afrikaanse Inkomstediens
(SAID) aan dat belasting op toegevoegde waarde (BTW) aangegaan op
aandeeluitreikingskoste nie aftrekbaar is nie. Hierdie siening is gebaseer op
die ITC 1744-saak. Die uitspraak in die ITC 1744-saak is gebaseer op die
mening uitgespreek in ´n Europese hofsaak wat in 1994 beslis is. Sedertdien
het die European Court of Justice (ECJ) in ´n aantal sake die aftrekbaarheid
van BTW op aandeeluitreikingskoste oorweeg en beslis dat insetbelasting in
sekere gevalle aftrekbaar sal wees. In hierdie artikel word die vraag gestel of
argumente soortgelyk aan die argumente gevolg deur die ECJ in Suid-Afrika
aangevoer kan word. Gebaseer op die ontleding van die argumente in die
ECJ-beslissings, binne die konteks van die Suid-Afrikaanse wetgewing, word
aangevoer dat daar gebiedende gronde bestaan om in Suid-Afrika te
argumenteer dat ´n aandeeluitreiking nie ´n lewering daarstel nie en dat
aandeeluitreikingskoste as ´n algemene bokoste beskou kan word. Hierdie
argumente kan die SAID aanmoedig om die siening wat tans gehuldig word
by die aftrekbaarheid van BTW op aandeeluitreikingskoste in Suid-Afrika, te
hersien.
It is at the heart of any business to raise capital to start up or expand its activities. In doing so, several types of costs, such as share transfer secretarial charges, legal fees, fees payable to merchant bankers and specialist consultants, as well as listing fees, may be incurred, often in significant amounts, especially in the private equity industry. Value added tax (VAT) is levied on the supply of these services. The level of share issue costs is significantly affected by the deductibility (or not) of the VAT paid on the share issue costs incurred by the entity issuing the shares and can become an important factor in determining how and how much finance will be raised.
It is at the heart of any business to raise capital to start up or expand its activities. In doing so, several types of costs, such as share transfer secretarial charges, legal fees, fees payable to merchant bankers and specialist consultants, as well as listing fees, may be incurred, often in significant amounts, especially in the private equity industry. Value added tax (VAT) is levied on the supply of these services. The level of share issue costs is significantly affected by the deductibility (or not) of the VAT paid on the share issue costs incurred by the entity issuing the shares and can become an important factor in determining how and how much finance will be raised.
Description
Keywords
ITC 1744 case, ECJ arguments
Sustainable Development Goals
Citation
Van der Zwan, P & Stiglingh, M 2011, 'Deductibility of value added tax on costs incurred to raise share capital : a critical analysis of the ITC 1744 case', De Jure, vol. 44, no. 2, pp. 319-338.