Tax: No need to panic

Author: Claire Bisseker (Financial Mail) Judge Dennis Davis, who heads the Davis Tax Committee, believes that despite slow economic growth, SA will meet its revenue targets next year without any significant tax increases. Davis’s comments, made in an exclusive interview with the Financial Mail, should bolster the credibility of national treasury’s fiscal consolidation plans at a time when Moody’s is considering downgrading SA’s sovereign credit rating. His optimism stems mainly from his estimate that the new tax amnesty announced in the 2016 budget will raise R6bn-R10bn or even more within the next 12 months.

Taxation of trusts in the future

Author: Heinrich Louw (Senior Associate at Cliffe Dekker Hofmeyr). Earlier this year the Davis Tax Committee (DTC) released its first report on estate duty for public comment. The report contained a number of disconcerting recommendations with regard to the taxation of trusts. The DTC was tasked with considering the use of trusts as vehicles employed by taxpayers to divest themselves of their assets during their lifetime, thereby saving estate duty upon their death. On the DTC’s analysis, there are two main problems with the current regime relating to the taxation of trusts.

Are Wealth taxes a likely probability for South Africa?

The Davis Tax Committee (DTC) consideration that a wealth tax for South Africans is not the universal solution to South Africa’s revenue needs. This is the view of Rhodes Business School Professor and DTC member Matthew Lester who was speaking at a BDO South Africa event last week. Professor Lester dissected the current taxation system within the country commenting on what is working, what isn’t and what changes need to be implemented for the future economic growth of the country.

Davis Tax Committee: First interim report on mining

Authors: Gigi Nyanin and Nicole Paulsen The Davis Tax Committee (Committee) was established by the Minister of Finance (Minister) to give effect to government’s tax review and assessment of the tax policy framework and its role in supporting the objectives of inclusive growth, employment, development and fiscal sustainability, as proposed in the 2013/14 National Budget. The Committee submitted the First Interim Report on Mining (Report) to the Minister on 1 July 2015, and it was released for public comment on 13 August 2015. This Report is a provisional interim report and a useful point of departure for engaging with stakeholders before final and conclusive recommendations are made to the Minister, who will then determine any further steps to be taken with regard to the Report.

Davis Tax Committee – Significant changes proposed to Estate Duty and Tax on Trusts

True to its mandate, the Davis Tax Committee (DTC) has been hard at work reviewing the South African tax system. Since its formation in 2013, it has already issued reports on small and medium enterprises (SMMEs), Base Erosion and Profit Shifting (BEPS) and VAT. It also compiled a macro analysis of the South African tax system, a World Bank study on the effective tax burden in South Africa and presented carbon tax proposals. However, on 13 July the committee issued the “Estate Duty Report” which deals with a variety of topics sure to spark outcry and fierce debate, especially from more wealthy taxpayers. Whatever the outcome of the report may be following consultations, taxpayers will need to review their estate and tax plans to accommodate the impending changes.

The Davis Tax Committee’s interim report on estate duty

The first interim report to the Minister of Finance by the Davis Tax Committee (Committee), in respect of estate duty was made public last week. The Committee’s frame of reference was to consider the continued role and relevance of estate duty in South Africa. The context of the Committee’s work was to provide a progressive tax base to address the structural inequalities in our society. RECOMMENDATIONS Capital Transfer Tax The tax imposed upon a person’s estate on transfer is commonly called capital transfer tax and is in essence a form of wealth tax.

The Davis Tax Committee proposes radical overhaul of trust taxation

The Davis Tax Committee (‘the DTC’) released its First Report on Estate Duty. The DTC decided in favour of a modified estate duty and against the introduction of a Capital Transfer Tax. The DTC recommends that the estate duty exemption that currently applies to inheritances by surviving spouses be removed or that it be limited to a specific amount. This will result in earlier collection of estate duty. As the contribution of estate duty to the total tax take is actually marginal, this change will arguably have a minute effect on tax collections, but will result in increases administration and estate planning costs. The DTC also addressed trust taxation. To curb tax avoidance it proposes that South African trusts be taxed on income distributed to beneficiaries. Trust income will then be subject to tax at the

DAVIS TAX COMMITTEE OPENS THE DOOR FOR HIGHER VAT RATE TO BE CONSIDERED

Author:  Ferdie Schneider, National Head of Tax at BDO South Africans can be justifiably proud of the fact that our country is deemed to have one of the most efficient VAT systems in the world. This accolade emerged from the Davis Tax Committee’s first interim report on Value Added Tax (VAT) which was released for comment recently, with the source of the favourable rating coming from none other than the International Monetary Fund. But perhaps the most important take-away from the interim report is that it definitely opens the way for a potential “moderate” increase in the VAT rate, especially as this is seen by the committee as having a less distortionary effect on macro-economic activity than an increase in direct taxes would have – both personal taxes and corporate taxes.

Davis Tax Commitee Call for comment: Proposed Carbon Tax

Author: The Davis Tax Committee The Davis Tax Committee (DTC) has acceded to requests by a number of stakeholders to review the scope and design of the proposed carbon tax as part of its review of the South African tax system as a whole. The Minister of Finance announced in his 2015 Budget Speech that a draft carbon tax bill is expected to be published for public comment during the course of 2015. This will be a culmination of discussion papers released by the National Treasury for comments in 2010, 2013 and 2014. These papers and further information on the carbon tax are available from the National Treasury.

State faces a tough balancing act on tax

Author: Banele Ginindza (Business Report) Finance Minister Nhlanhla Nene last week received preliminary recommendations from the Davies Tax Committee, but whatever the recommendations, the government faces a tough balancing act. Nene said last week at the presentation of the SA Revenue Services (Sars) collection report that he “will want to allow South Africans to engage quite openly on the issue of other sources of government revenue”.