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The deductibility of value added tax on costs incurred to raise share capital: a critical analysis of the ITC 1744-case

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dc.contributor.advisor
dc.contributor.author Stiglingh, Madeleine
dc.contributor.author Van der Zwan, Pieter
dc.date.accessioned 2012-10-01T06:36:09Z
dc.date.available 2012-10-01T06:36:09Z
dc.date.issued 2011
dc.identifier.citation Van der Zwan, P. & Stiglingh, M. 2011. The deductibility of value added tax on costs incurred to raise share capital: a critical analysis of the ITC 1744-case. De Jure, 44(2):319-338. [http://www.dejure.up.ac.za] en_US
dc.identifier.issn 2225-7160
dc.identifier.uri http://hdl.handle.net/10394/7411
dc.description.abstract Companies incur significant amounts of share issue costs to raise finance for their operations. The South African Revenue Service (SARS) currently contends that value added tax (VAT) is not deductible on share issue costs. This view is based on the ITC 1744 case. The judgment in ITC 1744 relied on the views expressed in a European case decided in 1994. Since then the question of the deductibility of VAT incurred on share issue costs has been considered in a number of judgments in the European Court of Justice (ECJ) and it was held that in certain circumstances input tax may be deducted. In this article, the question is posed whether arguments similar to those followed by the ECJ may be advanced in South Africa. Based on the analysis of the reasoning followed in the ECJ judgments in the context of the South African legislation it is submitted that compelling grounds may exist to argue that a share issue does not constitute a supply and that share issue costs may be viewed as general costs to the business. This argument may prompt SARS to reconsider its view held on the deductibility of VAT levied on share issue costs in South Africa. en_US
dc.description.abstract Die aftrekbaarheid van belasting op toegevoegde waarde op kostes aangegaan om aandele uit te reik: 'n Kritiese ontleding van die ITC 1744-saak 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.
dc.language.iso es en_US
dc.publisher University of Pretoria en_US
dc.title The deductibility of value added tax on costs incurred to raise share capital: a critical analysis of the ITC 1744-case en_US
dc.type Article en_US


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