We refer to the Revenue Laws Amendment Bill published for comment on 1 October 2004, which proposes the removal of non-proprietary exchanges’ tax exempt status. We understand an informal briefing on the draft legislation is scheduled for Friday 15 October and hearings for 19, 20 and possibly 22 October this year.
The JSE, like other exchanges, has historically had a tax exempt status. Bearing in mind that the JSE is not supported in any way by government funding, this tax exempt status has enabled the JSE to accumulate reserves, which it has used to fund strategic projects. These strategic projects have resulted in the JSE being able to offer a world class exchange in South Africa. The removal of the tax exempt status therefore does hold significant consequences for the JSE. Resolving the resultant regulatory and tax consequences will take time. That said, however, we do understand National Treasury’s in principle desire to remove tax exemptions.
For this reason we have been working with National Treasury to clarify the conditions applicable to the removal of the JSE’s tax exempt status. Following our discussions with National Treasury, they have undertaken to amend the draft Bill as it was published for comment, clarifying that the removal of the tax exempt status will occur on a date to be promulgated in future. This will allow the conclusion of the thorough investigation into the regulatory and tax consequences.
The JSE is currently in discussions with National Treasury to progress this investigation as a matter of urgency.
Should you require any additional information from us, please do not hesitate to contact me or Ms Elbi J van Vuuren (tel: 11 520 7015; fax: 11 520 8604; e-mail: [email protected]).