The Tax System Of South Africa

1507 WordsNov 17, 20157 Pages
As there aren’t two eggs are identical, tax systems are vary from country to country. Each country has its own rules and principles to levy taxes from its citizens and foreigner to whom conducts business in South Africa to support the operation of its country. When a country’s own residents or citizens conduct business or trade abroad, or foreigners invest or trade within its domestic jurisdiction, it is necessary for the tax system to which has impact on these activities to be balance carefully with domestic and international economic objectives. It is essential to have knowledge and to understand how the taxation system is applied to residents and non-residents to maximize one’s own benefit by having adequate tax…show more content…
Income is taxed in the country where that income originates, irrespective of the legal or physical residence of the recipient of income under the source based tax system. Even though South Africa Adopted the residence based system in 2011, many states still will tax the income derived by a person from commercial activities undertaken in their states, hence a source based system of tax imposes a taxation liability on income arising within a specific jurisdiction or territory. From the Appellate Division of Kerguelen Sealing & Whaling Co., Ltd v CIR ˡ, the fundamental logic of a residence based tax system has been contrasted to that of a source based system in the following: “In some countries residence (or domicile) is made the test of liability for the reason, presumably, that residents, for the privilege and protection of residence, can justly be called upon to contribute towards the cost of good order and government of the country that shelters 1. See e.g. Kerguelen Sealing &Whaling Co., Ltd v CIR, 1939 AD 487, 10SATC:363 him. In others (as in ours) the principle of liability adopted is ‘source of income’: again, presumably, the equity of the levy rests on the assumption that a country that produces wealth by reason of its natural resources or the activities of its inhabitants is entitled to a share of that wealth, wherever the recipients of it may be live. In both systems there is, of course, the assumption that the country adopting the
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