South Africa's new general anti-avoidance rule - the final GAAR

A new general anti-avoidance rule (GAAR) was enacted in South Africa which became effective on 2 November 2006. This article first summarizes the former GAAR, the related discussion paper and the changes proposed, and discusses the response of the South African Revenue Service (SARS) and the Treasury to the proposed changes. The main part of the article examines the new GAAR, including its terminology, the definitions of "impermissible avoidance arrangement" and "lack of commercial substance", the remedies of the SARS, and the administrative provisions of the GAAR. The article also considers the new legislation on "reportable arrangements", which will become effective only later. The Appendix to the article contains the text of the new GAAR.