Abduraghmaan Farao is a legal practitioner, driven by a passion for providing clients with effective solutions to their legal matters. With a degree in law from the University of the Western Cape, Abduraghmaan launched his career at the South African Revenue Services (SARS), where he quickly gained recognition for his expertise in tax law and ability to provide comprehensive tax services. After honing his skills at SARS, Abduraghmaan joined STBB and expanded his legal practice to include other areas of law. He has since advised clients across a wide range of industries on complex tax issues, delivering successful outcomes in even the most challenging tax disputes. Abduraghmaan's commitment to staying ahead of the latest tax laws and regulations is unwavering. He is a regular attendee of tax conferences and seminars and is highly sought-after as a speaker at real estate agent training sessions, where he shares his wealth of knowledge and expertise with those in the field. In addition to his passion for tax law, Abduraghmaan has a keen interest in property law and conveyancing, making him a well-rounded legal professional with a comprehensive understanding of exchange control and forex. He is committed to helping clients navigate the complexities of the legal system, and his experience, expertise, and commitment to excellence make him a valuable resource for anyone seeking an effective solution to their legal matter.

All About Property | Navigating the Tax landscape: Clarifying transfer duty v VAT on the sale of shares in a property-owning company connected to an enterprise

NAVIGATING THE TAX LANDSCAPE: CLARIFYING TRANSFER DUTY V VAT ON THE SALE OF SHARES IN A PROPERTY-OWNING COMPANY CONNECTED TO AN ENTERPRISE

By Abduraghmaan Farao

In a property-related transaction, one is responsible for paying transfer duty or VAT. There is no division or apportionment of these payments, which are regulated under two separate Acts.

Under the Transfer Duty Act 40 of 1949 (‘TD Act’), the purchase of shares in a company is subject to transfer duty if the company is a residential property company. As defined in section 1(1)(b) of the TD Act, a ‘residential property company’ is a company that holds residential property where the fair value of the property comprises more than 50% of the aggregate fair value of all assets held by said company. Under the same Act, a ‘residential property’ includes any dwelling-house, apartment, and holiday home, but excludes a hotel, guesthouse, and apartment complex of five or more units used for rental purposes.

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