Comshipco Shiffahrtsagentur GmbH v Commissioner for South African Revenue Service

The appellant, Comshipco Shiffahrtsagentur GmbH, conducted business in Durban as a charterer of ships and was registered as an exporter carrying on an export service industry under section 11bis of the Income Tax Act 58 of 1962. In terms of charterparty agreements with charterers, the appellant paid so-called ‘address commissions’, calculated as a percentage of the hire earned and paid. These commissions were paid to charterers in consideration for services rendered by them in relation to port operations and the handling of vessels after the conclusion of the charterparty. The appellant claimed these address commissions as ‘marketing expenditure’ qualifying for a marketing allowance under section 11bis(4)(f). The Commissioner for SARS disallowed the deduction. An appeal to the Natal Income Tax Special Court was dismissed, and the appellant appealed further to the Supreme Court of Appeal.

The appeal was dismissed with costs, including the costs of two counsel. The Commissioner’s disallowance of the marketing allowance was upheld.

This case clarifies the interpretation of section 11bis(4)(f) of the Income Tax Act in relation to export service industries. It draws a clear distinction between commission paid to procure orders and payments made pursuant to the performance of contractual obligations. The judgment confirms a narrow and purposive approach to export marketing allowances and reinforces that commercially necessary payments do not automatically qualify as deductible marketing expenditure.