CAPE TOWN: The South African Revenue Service (SARS) has issued a draft interpretation note that provides guidance on the income tax consequences when a debt, or a portion of a debt, is forgiven without “adequate” consideration.
South Africa overhauled its rules on the taxation of companies receiving debt relief in January 1, 2013, after it was considered that the tax burden on these companies was undermining the benefits of that relief. The interpretation note seeks to provide enhanced guidance on the new uniform system. The rules are aimed at ensuring that a reduction of debt is not subject to more than one of the following taxes.
