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Customs and Excise Act, 1964 (Act No. 91 of 1964)

Chapter XII : General

119B. Arrangements for obtaining undue tax benefits

 

(1) Notwithstanding anything in this Act, whenever the Commissioner is satisfied that any arrangement—
(a) has been entered into or carried out which has the effect of any person obtaining a tax benefit; and
(b) having regard to the substance of the arrangement—
(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 may determine the liability for duty imposed under this Act, and the amount thereof, as if the arrangement had not been entered into or carried out, or in such manner as in the circumstances of the case the Commissioner deems appropriate for the prevention or diminution of that tax benefit.

 

(2) An arrangement is presumed to have been entered into or carried out for the sole or main purpose of obtaining a tax benefit unless and until the party obtaining a tax benefit proves that, reasonably considered in light of the relevant facts and circumstances, obtaining a tax benefit was not the sole or main purpose of the arrangement.

 

(3)        For the purposes of this section—

 

"arrangement"

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

 

"dealing at arm’s length"

means a transaction in the open market in which two or more independent persons acting in good faith, without regard to the liability for any tax, duty or levy, would freely and without conflict of interest agree to transact in the ordinary course of business; and

 

"tax benefit"

includes—

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

 

[Section 119B inserted by section 81(1) of the Taxation Laws Amendment Act, 2016 (Act No. 15 of 2016)]