South African High Court Holds Taxpayer May Not be Subject to GAAR if Unaware of Impermissible Avoidance

The South Africa Revenue Service has published a recent judgment of the High Court concerning the application of GAAR in cases where the taxpayer was unaware of the impermissible avoidance arrangement. The case involved Absa Bank Ltd and its wholly owned subsidiary Absa Towers (Pty) Ltd (collectively referred to as Absa) and a controversy about whether or not an impermissible tax avoidance arrangement was conceived to evade a tax liability.

Under the South African GAAR, an avoidance arrange…