12     General anti-avoidance rule

 

(1)     Notwithstanding anything to the contrary in this Act, if the Commissioner is satisfied that a disposal, transfer, operation, scheme or understanding (whether entered into or carried out before or after the commencement of this Act)—

 

(a)     has been entered into or carried out, which has the effect of avoiding or postponing liability for the royalty, or of reducing the amount thereof;

 

(b)     having regard to the circumstances under which the disposal, transfer, operation, scheme or understanding was entered into or carried out—

 

(i)      was entered into or carried out—

 

(aa)   in the case of a disposal, transfer, operation, scheme or understanding in the context of business, in a manner which would not normally be employed for bona fide business purposes, other than the obtaining of a royalty benefit; and

 

(bb)   in the case of any other disposal, transfer, operation, scheme or understanding not falling within the provisions of item (aa), by means or in a manner which would not normally be employed in the entering into or carrying out of a disposal, transfer, operation, scheme or understanding of the nature of the disposal, transfer, operation, scheme or understanding in question; or

 

(ii)      has created rights or obligations which would not normally be created between persons dealing at arm’s length under a disposal, transfer, operation, scheme or understanding of the nature of the disposal, transfer, operation, scheme or understanding in question; and

 

(c)     was entered into or carried out solely or mainly for the purposes of obtaining a royalty benefit,

 

the Commissioner must determine the liability for the royalty, and the amount thereof, as if the disposal, transfer, operation, scheme, or understanding had not been entered into or carried out, or in such manner as the Commissioner in the circumstances deems appropriate for the prevention or diminution of avoidance, postponement or reduction.

 

(2)     A decision of the Commissioner under subsection (1) is subject to objection and appeal in accordance with Chapter 9 of the Tax Administration Act, 2011 (Act 28 of 2011), and whenever in proceedings relating thereto it is proved that the disposal, transfer, operation, scheme or understanding in question would result in the avoidance or postponement of liability for the royalty, or in the reduction of the amount thereof, it is presumed, until the contrary is proved, in the case of any such disposal, transfer, operation, scheme or understanding, that it was entered into or carried out solely or mainly for the purposes of the avoidance or the postponement of such liability, or the reduction of the amount of such liability.

[Subsection (2) substituted by section 27 of Act 39 of 2013]

 

(3)     For purposes of this section, “royalty benefit” includes any avoidance, postponement or reduction of the liability for payment of the royalty mentioned in section 2.