Sibanda & Zantwijk

We are specialists in the taxation of intellectual property (IP). Apart from our practical experience in this regard, we have prepared the training workshops for SARS personnel, and are engaged by Treasury to assist in drafting the IP sections in our Income Tax Act (currently s11D "R&D tax incentive", s23I "Royalty arbitrage" and s31 "transfer pricing").

 

IP is a field that has long been ignored by SARS. However, the days of immunity have passed. Having skilled up in this area, intellectual property has now become a focus area for SARS.

 

See our Articles for discussions on various IP-related tax risks.

 

In addition, we have extensive experience in IP-related structured finance transactions (which have recently been tackled extremely successfully and aggressively by SARS) and would be pleased to assist you by providing objective opinions on such structures.

 

We provide tax-related advice on:

 

The licensing of IP and the deductibility of royalty payments, including:

- nature of royalty payments;

- deductibility of royalty payments;

- structuring of upfront royalty premiums and royalty payments in general;

- determination of royalty rates;

- transfer pricing considerations in international agreements;

- apportionment of “royalties” in licences that provide for the provision of technical

   services, ongoing research and development (R&D) and the use of IP;

- withholdings tax payable on royalties;

- beneficial ownership of royalty receipts;

- VAT issues relating to licences;

- accrual, and taxation of royalty receipts.

 

Allowances available for the acquisition of IP, including:

- whether allowances may be claimed;

- types of IP that fall within our allowance section;

- quantum of allowances that may be claimed;

- manner in which the purchase price for intellectual property should be paid;

- form in which assignment agreements should be drafted.

 

Allowances available for R&D, including:

- whether work conducted falls within the scope of the R&D section;

- options for the purchase of equipment;

- options for the acquisition or construction of buildings;

- whether the R&D should be spun-off into a separate company;

- restructuring of existing R&D programs/structures/arrangements;

- the manner in which R&D should be funded;

- potential tax consequences of R&D agreements (in particular the termination of such

   agreements);

- the structuring of R&D expenditure where foreign entities are involved;

- availability of alternative/additional R&D allowances in other countries.

 

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