How to legally minimise your taxes
Ever wished for a quick reference guide on complicated tax matters? Here is the answer to your prayers.
99 Tax Tips covers topical, everyday questions on personal and business taxes in easy-to-read English. Often- complicated tax concepts have been transformed into practical, extremely useful information.
See how to legally minimise your taxes; learn how to conduct yourself during a SARS audit.
Make 99 Tax Tips your constant companion to make the most of your tax affairs and stay compliant.
Royalty payments made to a foreign licensor may not be deducted where intellectual property was, at any time, created or owned by a South African and given to a foreign entity without exchange-control approval.
If an international licence provides for continuing modifications, such as research and development, or any technical services, you must divide and allocate the 'royalty' among payments for:
· The use of the intellectual property;
· The technical services provided; and
· Continuous Research and Development activities.
Very few 'royalties', which are paid in terms of software licences, are actually royalties at all.
So such amounts won't be subject to withholding tax (Organisation for Economic Co-operation and Development (OECD)
Always remember that:
· Vat is levied on all domestic licences;
· Vat is only payable on 'incoming licenses' if the license is not a Vat vendor or won't be using the licensed rights in their 'Vatable' enterprise; and
· Vat isn't payable for 'outgoing licenses'.
*Those were 4 rules to remember the next time you deal with royalty payments.
Make sure you abide by them correctly, otherwise SARS will hit you hard with penalties!
To learn more, page over to Chapter R 09: Royalty Payments
in your Practical Tax Loose Leaf Service
handbook, or click here
if you don't already have a copy of this invaluable resource.