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  • Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 1/21/2014

South Africa - Tax implications of assumption of contingent liabilities 

January 21: The tax implications in relation to the assumption of contingent liabilities in partial settlement of the purchase price of assets acquired as part of a going concern have been addressed by South African Revenue Service (SARS).

The initial views of SARS regarding the tax implications for the seller and purchaser in relation to the assumption of such contingent liabilities (specifically “free-standing contingent liabilities”) would include, for example, provisions for bonuses, leave pay, warranties, etc.


The transactions at issue include business transactions in which the seller and purchaser agree to the settlement of the purchase price, for business assets, using a combination of cash and the assumption of the business liabilities (generally including free-standing contingent liabilities).


Read a January 2014 report prepared by the KPMG member firm in South Africa: New clarity on SARS views requires careful drafting of sales of going concern agreements




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