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Value-Added Tax Act, 1991 (Act No. 89 of 1991)

Part X - Miscellaneous

73. Schemes for obtaining undue tax benefits

 

(1) Notwithstanding anything in this Act, whenever the Commissioner is satisfied that any scheme (whether entered into or carried out before or after the commencement of this Act, and including a scheme involving the alienation of property)—
(a) has been entered into or carried out which has the effect of granting a tax benefit to any person; and
(b) having regard to the substance of the scheme—
(i) was entered into or carried out by means or in a manner which would not normally be employed for bona fide business purposes, other than the obtaining of a tax benefit; or
(ii) has created rights or obligations which would not normally be created between persons dealing at arm's length; and
(c) was entered into or carried out solely or mainly for the purpose of obtaining a tax benefit,

the Commissioner shall determine the liability for any tax imposed by this Act, and the amount thereof, as if the scheme had not been entered into or carried out, or in such manner as in the circumstances of the case he deems appropriate for the prevention or diminution of such tax benefit.

 

(2) For the purposes of this section—

 

"scheme" includes any transaction, operation, scheme or understanding (whether enforceable or not), including all steps and transactions by which it is carried into effect;

 

"tax benefit" includes—

(a) any reduction in the liability of any person to pay tax; or
(b) any increase in the entitlement of any vendor to a refund of tax; or
(c) any reduction in the consideration payable by any person in respect of any supply of goods or services; or
(d) any other avoidance or postponement of liability for the payment of any tax, duty or levy imposed by this Act or by any other law administered by the Commissioner.

 

(3) Any decision of the Commissioner under this section shall be subject to objection and appeal, and whenever in proceedings relating thereto it is proved that the scheme concerned does or would result in a tax benefit, it shall be presumed, until the contrary is proved that such scheme was entered into or carried out solely or mainly for the purpose of obtaining a tax benefit.