ARTICLE · 09 MAY 2016

SARS Issues Important Tax Ruling For Renewable Energy Financing Structures

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On 17 March 2016, the South African Revenue Service issued an interesting binding private ruling concerning a share subscription transaction which was followed by two share buyback transactions.

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On 17 March 2016, the South African Revenue Service ("SARS") issued an interesting binding private ruling ("BPR 227") concerning a share subscription transaction which was followed by two share buyback transactions.

BPR 227 deals with an area that National Treasury and SARS have identified as a problem, namely where a shareholder disposes of its shares through means of a share buyback as opposed to selling the shares outright to a third party. Before dealing with BPR 227 we will explain the background to this issue, the steps taken by National Treasury and SARS to deal with this issue and why BPR 227 was treated differently.

Published SARS rulings are necessarily summaries of the facts and circumstances. Consequently, BPR 227 (and this article discussing it) should be treated with care.

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