I have been a bit slow here. These two articles do have an impact on BEE, one more so than the other.
Income tax laws support BEE deals
BEE deals will happen - hopefully they'll soon become more like normal M@A deals in time and not specifically deals that are done with people because they are black (the lock-in clause on most deals demonstrates that it is a black face that is desired).
I'll summarise the article but I do recommend that you read it.
Section 24N of the Income Tax Act gives a helping hand to companies who are concerned about the effect that income tax would have on seller-financed sales of equity stakes. This section overrides the general principle of tax law which declares that tax is payable on the full benefit of an amount paid in the year of assessment in which it occurs, even if payment of some of the benefit was planned to take place some time in the future.
This amendment to the Income Tax Act actively promotes the seller-financed sale of equity stakes in businesses as the seller is only taxed on the proceeds of the sales as and when they become payable.
Another benefit of the provision is that it makes empowerment deals work by deterring black economic empowerment entities from making an early exit from the transaction.
This was controlled through a provision which penalised the purchaser if it sold its holding before all the instalments had been paid. The capital gains tax became correspondingly higher as the base cost of the transaction was lowered.
The expert in the article was Professor Peter Surtees, a director at Deneys Reitz Tax Services
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