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Evaluation of the "source " rules as contained in section 9 of the South African Income Tax Act as relating to software in the context of the digital economy
In recent decades, the rise of the digital economy has drastically changed the way the world does business. Business can now be conducted without regard to geographical boundaries and limitations and organisations have the ability to conduct business making use of mobile and sophisticated software i...
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| Format: | Thesis |
| Language: | English |
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Department of Finance and Tax
2016
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| _version_ | 1867614254714060800 |
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| access_status_str | Open Access |
| author | Flynn, Byron |
| author2 | Roeleveld, Jennifer |
| author_browse | Flynn, Byron Roeleveld, Jennifer |
| author_facet | Roeleveld, Jennifer Flynn, Byron |
| author_sort | Flynn, Byron |
| collection | Thesis |
| description | In recent decades, the rise of the digital economy has drastically changed the way the world does business. Business can now be conducted without regard to geographical boundaries and limitations and organisations have the ability to conduct business making use of mobile and sophisticated software in South Africa without having a significant physical presence in the country. In addition, the characterisation of income from new software-related arrangements may be difficult to determine in this new economy. In response to the above, there is a general move globally to align taxation with economic substance and value creation and there is an increased focus on source-based taxation. Consequently, this dissertation conducts an analysis of the relevance and appropriateness of South Africa's source rules pertaining to software arrangements as contained in section 9 of the Income Tax Act (ITA) and as espoused in the common law. It is submitted that there are four main income characterisations applicable to software arrangements (sales, service arrangements, leases and royalties arrangements) and that it is possible to apportion a software-related payment into these various components for tax purposes. It is only once this characterisation has been completed that the source rules applicable to the various components should be applied. In relation to this, it is submitted that with the exception of show-how as espoused in section 49A of the ITA, the concepts of a royalty and know-how are consistent in the OECD Model Tax Convention and the ITA. Specifically, in determining if a software payment constitutes a royalty, a distinction should be made between the copyrighted article and the copyright itself, unless the component of the payment attributable to one of the items is clearly insignificant. Only the component of the payment attributable to the use of a copyright would constitute a royalty for South African tax purposes. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/21746 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:49:07.674Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2016 |
| publishDateRange | 2016 |
| publishDateSort | 2016 |
| publisher | Department of Finance and Tax |
| publisherStr | Department of Finance and Tax |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/21746 Evaluation of the "source " rules as contained in section 9 of the South African Income Tax Act as relating to software in the context of the digital economy Flynn, Byron Roeleveld, Jennifer Taxation In recent decades, the rise of the digital economy has drastically changed the way the world does business. Business can now be conducted without regard to geographical boundaries and limitations and organisations have the ability to conduct business making use of mobile and sophisticated software in South Africa without having a significant physical presence in the country. In addition, the characterisation of income from new software-related arrangements may be difficult to determine in this new economy. In response to the above, there is a general move globally to align taxation with economic substance and value creation and there is an increased focus on source-based taxation. Consequently, this dissertation conducts an analysis of the relevance and appropriateness of South Africa's source rules pertaining to software arrangements as contained in section 9 of the Income Tax Act (ITA) and as espoused in the common law. It is submitted that there are four main income characterisations applicable to software arrangements (sales, service arrangements, leases and royalties arrangements) and that it is possible to apportion a software-related payment into these various components for tax purposes. It is only once this characterisation has been completed that the source rules applicable to the various components should be applied. In relation to this, it is submitted that with the exception of show-how as espoused in section 49A of the ITA, the concepts of a royalty and know-how are consistent in the OECD Model Tax Convention and the ITA. Specifically, in determining if a software payment constitutes a royalty, a distinction should be made between the copyrighted article and the copyright itself, unless the component of the payment attributable to one of the items is clearly insignificant. Only the component of the payment attributable to the use of a copyright would constitute a royalty for South African tax purposes. 2016-09-14T12:50:36Z 2016-09-14T12:50:36Z 2016 Master Thesis Masters MCom http://hdl.handle.net/11427/21746 eng application/pdf Department of Finance and Tax Faculty of Commerce University of Cape Town |
| spellingShingle | Taxation Flynn, Byron Evaluation of the "source " rules as contained in section 9 of the South African Income Tax Act as relating to software in the context of the digital economy |
| thesis_degree_str | Master's |
| title | Evaluation of the "source " rules as contained in section 9 of the South African Income Tax Act as relating to software in the context of the digital economy |
| title_full | Evaluation of the "source " rules as contained in section 9 of the South African Income Tax Act as relating to software in the context of the digital economy |
| title_fullStr | Evaluation of the "source " rules as contained in section 9 of the South African Income Tax Act as relating to software in the context of the digital economy |
| title_full_unstemmed | Evaluation of the "source " rules as contained in section 9 of the South African Income Tax Act as relating to software in the context of the digital economy |
| title_short | Evaluation of the "source " rules as contained in section 9 of the South African Income Tax Act as relating to software in the context of the digital economy |
| title_sort | evaluation of the source rules as contained in section 9 of the south african income tax act as relating to software in the context of the digital economy |
| topic | Taxation |
| url | http://hdl.handle.net/11427/21746 |
| work_keys_str_mv | AT flynnbyron evaluationofthesourcerulesascontainedinsection9ofthesouthafricanincometaxactasrelatingtosoftwareinthecontextofthedigitaleconomy |