Africa tax in brief

DEMOCRATIC REPUBLIC OF THE CONGO (DRC): Refund of input VAT credit suspended In terms of the DRC value added tax (“VAT”) legislation, export businesses, companies ceasing their activities, oil and mining companies (during the exploration phase) and companies making significant investments are entitled to request input VAT credit refunds. However, on 18 April 2016, the government announced the suspension of the refund of input VAT credits for all taxpayers in an attempt to bolster its decreasing tax revenues resulting from the decrease in commodity prices.

SARS’ constitutional obligations and taxpayers’ rights

Given media coverage of the various Constitutional Court challenges involving government institutions and the Presidency; the perceived power struggle between the Commissioner for the South African Revenue Service (SARS) and the Minister of Finance; as well as SARS’ continued pressure to collect revenue in difficult economic times that see corporate taxpayers endure declining revenues and increasing costs; it is useful to remind taxpayers and their shareholders of their constitutional rights and SARS’ constitutional obligations when it performs its functions in administering various taxation statutes. This topic is very complex and, accordingly, what follows is a very broad overview of these issues. Taxpayers and their shareholders are encouraged to obtain specialised legal advice or assistance when confronted with potential investigations or audits by SARS.

2015/2016 Annual Reconciliation Declaration (EMP501) and Employees Income Tax Certificates [IRP5/IT3(a)s] to SARS

Employer Annual Reconciliation Employers are required to submit their Pay-As-You-Earn (PAYE) Employer Annual Reconciliations between 18 April and 31 May 2016 to SARS, confirming or correcting payroll tax amounts which were declared during the 2015/2016 tax period. This year, employers are urged to accurately verify and update each employee’s personal and financial details before submitting their Annual Reconciliation Declaration (EMP501) and Employees Income Tax Certificates [IRP5/IT3(a)s] to SARS.

Vendor beware: capital gains tax on instalment sales

Taxpayers should take great care when selling assets where the price is paid in instalments as the transaction may trigger some tricky capital gains tax (CGT) consequences. Consider the case of New Adventure Shelf 122 (Pty) Ltd vs The Commissioner of the South African Revenue Service (7007/2015) [2016] ZAWCHC 9 (17 February 2016). In this case the taxpayer acquired immovable property in 1999. In the taxpayer’s 2007 tax year it sold and transferred the property to a third party for a profit. The buyer had to pay the price of the property in instalments over more than one tax year.

Budget 2016 – Special Voluntary Disclosure Programme in respect of offshore assets and income

Following recent rumours that the Minister may announce an amnesty in respect of offshore assets and income, National Treasury released a media statement earlier today announcing the introduction of such a Special Voluntary Disclosure Programme (VDP). According to the media statement, the purpose of the VDP is to give non-compliant taxpayers an opportunity to voluntarily disclose offshore assets and income. The media statement warned that, with a new global standard for the automatic exchange of information between tax authorities providing SARS with information regarding such offshore assets and income from 2017, time is running out for taxpayers who have not disclosed assets abroad. The VDP will provide both individuals and companies with an opportunity to regularise their tax and exchange control affairs through one joint process.

It’s called 9/12 – Gordhan remembers Nene

Cape Town – The Budget Speech might have been a tad boring without any red-bereted comedy, but what was lacking in humour in Parliament was made up for behind the scenes during the pre-budget press conference on Wednesday. Finance Minister Pravin Gordhan revelled in the knowledge that the room of over 120 journalists was there to hear how he would save South Africa from a ratings downgrade and change the economic course of the country. “Thank you for welcoming the new old guy in such numbers,” Gordhan told the journalists. “Thank you for your support.” Once his opening remarks were complete, Gordhan was ready to pounce with humour and wit to retort to the challenging questions posed by journalists.

South African Budget 2016/17 – 2016 BUDGET HIGHLIGHTS

• Personal income tax relief of R5.65 billion • Capital gains tax inclusion rate for individuals, special trusts and insurers’ individual policyholder funds increases from 33.3% to 40%, and for other taxpayers from 66.6% to 80% • Assets transferred through a loan to a trust are to be included in the estate of the founder at death and interest-free loans to trusts are to be treated as donations • General fuel levy increases by 30 cents per litre on 6 April 2016 • Excise duties on alcoholic beverages increase by between 6.7% and 8.5% • From 1 April 2016 the plastic bag levy is to increase from 6 cents to 8 cents per bag and the incandescent globe tax will Increase from R4 to R6 per globe • A tyre levy at R2.30 per kilogram is to be introduced on 1 October 2016 and a tax on sugar-sweetened beverages on … Continue reading

Ratings-friendly budget key for rand

Author: Fadia Salie (News24). Cape Town – The rand, which tried to breach back below R15/$ for first time this year during the European session on Tuesday, was trading in a narrow band around R15.22/$ on Wednesday ahead of South Africa’s crucial budget speech. “Technical resistance proved too strong as cautious traders eye today’s Budget Speech,” said NKC Research in its daily economic report. “The local unit hit fresh 2-month highs as it continues to battle its way back from abyss, but the beach of Normandy lies ahead today and it could go either way.

The definition of ‘controlled group company’ and ‘equity share’

The South African Revenue Service (SARS) released Binding Private Ruling No 205 (Ruling) on 11 September 2015. The Ruling considers the meaning of ‘controlled group company’ and ‘equity share’. An approved venture capital company (VCC) in terms of section 12J of the Income Tax Act of 1962 (the Act), resident company A (Company A), and resident company B (Company B), proposed to incorporate a new company (RentalCo).