n South African Law Journal - The place of effective management criterion for determining the tax residence of persons other than natural persons : : notes

Volume 132, Issue 1
  • ISSN : 0258-2503
  • E-ISSN: 1996-2177



This note analyses the judgment of Louw J in (2012) 74 SATC 127 (WCC) ('') in regard to the 'place of effective management' criterion (also referred to as 'POEM') for the residence of a person other than a natural person. The entity dealt with in was a trust. This, however, is not significant given that a trust, which is not a person in terms of the common law, is deemed to be a person for the purposes of South African revenue law (see the definition of 'person' in s 1 of the Income Tax Act 58 of 1962 ('the Act')). According to that definition, the expression 'person other than a natural person' refers to entities such as trusts, deceased estates and insolvent estates. As such, trusts must, for tax purposes, be classified as juristic persons. A person other than a natural person is a tax resident in South Africa on one of two grounds: the place where the entity is 'incorporated, established or formed', or the entity's 'place of effective management' (para () of the definition of 'resident' read with para (ii) of the definition of 'gross income' in s 1 of the Act). The proviso to the 'resident' definition expressly excludes a person 'who is deemed to be exclusively a resident of another country for purposes of the application of' a double tax agreement ('DTA').

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