The upcoming Budget Speech comes against the backdrop of a depressing South African growth rate, stubbornly high unemployment, a depreciating Rand (with more US tapering still to come), continued strikes in the mining sector, deadly service delivery protests and declining tax revenues. On a more positive note: In November 2013 Minister Gordhan pointed to the continued growth in tax compliance by South Africans and said: “… the ability to collect tax revenue …to finance the provision of public services and socioeconomic infrastructure has been a cornerstone of our democracy these 20 years.”
Aurthor: Hugo Van Zyl (Cross Border Tax and Exchange Control Specialist) The first and very important note to make, in dealing with South African tax issues: tax year 2014 ends on the last day of FEBRUARY 2014. The South African tax year for most individuals, are 1 March until the last day of February in the next calendar year. Corporates can change their tax year-end to align with the last day of their financial year-end, yet Trusts partners in a JV or partnership, are obliged to file assuming a tax year-end on the last day of February, despite their financial year-end being the last day of another month. Yes, sadly this date, Friday 28th 2014, is not even listed on the SARS webpage on important dates, yet is an extremely important tax deadline.
It was, in part, this question which lay behind the appointment of a tax review committee in South Africa on 17 July 2013. At a recent dialogue facilitated by professional services firm Deloitte, Judge Dennis Davis, the Chairman of the Davis Tax Committee, for the first time revealed some of the background to the committee’s work and progress to date. As National Leader for Taxation Services at Deloitte, Nazrien Kader pointed out, “it has been nearly two decades since the Katz Commission undertook such a review in South Africa and global and local developments since have brought the applicability of our tax system under the spotlight.”
Cape Town – Finance Minister Pravin Gordhan drew a line in the sand on state spending on Wednesday, announcing cuts to official perks and giving half of government departments not a cent more in his mid-term budget review. In a last-minute agreement with cabinet, the state is to impose tighter guidelines on cars, accommodation and travel for all government leaders, from ministers to mayors. Gordhan said these would apply from December 1 and would spell an end to official credit cards, million rand vehicles, luxury hotel stays and expensive home upgrades for cabinet members. He told reporters it would also apply to the presidency. Asked about plans to purchase a new presidential jet, Gordhan said if this was necessary, it would be done. The finance minister said he expected the downgrading of official perks with regard to cabinet ministers would save only about R15m, but if applied across all Read More …
Cape Town – The governement will meet its budget deficit target for 2013/14, it was surprisingly announced in the mini budget on Wednesday.Although it was widely expected that the budget deficit of 4.2% of GDP would have to be lifted by Finance Minister Pravin Gordhan in the mini budget because of weaker economic growth, it will remain the same after including extraordinary receipts of R11.4bn and extraordinary payments of R0.2bn.When extraordinary transactions are excluded, the deficit climbs to 4.5%.According to the mini budget, the fiscal framework for the three-year spending period ahead strikes a balance between consolidation and support for the economy.The target of reducing the budget deficit to 3.0% of GDP in 2016/17 will therefore remain.Spending will remain within the non-interest expenditure ceiling established in the February budget. It states further that SA has several strengths that limit the vulnerability of its fiscal position and allow Read More …
Cape Town – Mixed reaction greeted the country’s mini budget framework, with opposition parties saying they were discouraged and the ruling party expressing satisfaction. The MPs spoke to reporters on the steps of the National Assembly on Wednesday afternoon, shortly after Finance Minister Pravin Gordhan tabled the mini budget. Democratic Alliance MP Tim Harris said the speech was full of reassuring rhetoric, but not nearly bold enough in tackling serious economic problems. “He speaks a lot about backing the NDP [National Development Plan], but then doesn’t table any of the practical measures that the NDP talks about, like active labour market policies, labour reform and removing trade barriers,” Harris said. “Without that action, I don’t think we’re going to make progress on stimulating growth, and currently we are growing at about two percent and this is half the rate of Turkey, Chile and Malaysia.”
Gordhan’s mid-term budget speech fulfils prophecies During his medium-term budget policy speech Finance Minister Pravin Gordhan kept the rhetoric upbeat and SA’s purse strings tight, as expected. Finance Minister Pravin Gordhan before the medium-term budget policy speech at Parliament in Cape Town. (David Harrison, M&G) Finance Minister Pravin Gordhan’s medium-term budget policy speech delivered in Parliament on Wednesday was the fulfilment of a general prophecy: he kept the rhetoric upbeat and the purse strings tight. This is the last medium-term budget speech to be heard before the 2014 elections.
On 27 February 2013 the Minister of Finance announced that a carbon tax will be introduced with effect from 1 January 2015. He also announced that a carbon tax policy paper would be published that will contain the details for the carbon tax. That policy paper was published on 2 May 2013. This article contains the key design features of the carbon tax as set out in the policy paper.
The treasury will earn at least R8-billion from a R120 per tonne tax on carbon emissions from industry. But most companies will get a 60% discount. The treasury will earn at least R8-billion from a R120 per tonne tax on carbon emissions from industry. (Reuters) South Africa committed in 2009 to reduce its carbon emissions by 34% by 2020. Every government department was then told to do its part, and treasury chose a carbon tax. In this year’s Budget speech, Pravin Gordhan said the tax would start on January 1 2015.
The government is gearing up to rake in a bigger share of multinational corporations’ profits. The Treasury and SARS yesterday invited public comment on their “Proposed limitations against excessive interest tax deductions” [excessive deductions of interest from taxable income].