The South African Revenue Service (SARS) has released Interpretation Note 120, providing guidance on the interpretation and application of Section 23I of the Income Tax Act 58 of 1962, which relates to the prohibition of deductions in respect of tainted intellectual property. --- Background The use of intellectual property belonging to another person normally carries a charge in the form of a royalty. Usually, such payment received will fall within the recipient's gross income and the payor will be allowed to claim a deduction under section 11(a) for the expenditure incurred in paying the royalty. Instances arose in which self-developed...