Overall, I think the minister had a very tough task to start with in trying to increase tax revenue and reduce costs. I think he has probably done the best he can with limited scope to move. The lack of tax increases is positive for the man in the street and for small businesses but at the same time, I do understand that they must spend money on things like Covid-19. It is great that they are not raising additional taxes to pay for this, but I do wonder what it means for our increased debt burden to finance this. Lowering the tax rate (for corporates) is great news, as it increases our competitiveness and puts us on a more even footing with our international competitors.
Month: February 2021
Budget 2021/22: Titos tax relief is mainly for lower and middle-income households
PRETORIA – FINANCE Minister Tito Mboweni said yesterday that the government would record its largest tax shortfall on record, collecting R1.21 trillion in taxes during 2020/21, or R213 billion less than the 2020 projections. Mboweni said the 2021/22 revenue collection estimate was R1.37trln, provided the underlying assumptions on the performance of the economy and the tax base held. He said the R40bn in previously proposed tax measures would be withdrawn to protect the ailing economy. We have chosen not to introduce the tax measures initially proposed in the October Medium Term Budget Policy Statement, Mboweni said.
Budget 2021/22 – Mboweni Budget gives market sentiment a lift
Author: Siphelele Dludla. JOHANNESBURG – STOCKS rose the highest this year yesterday as the JSE benchmark index breached the 67 000 points mark again buoyed by mining and resources stocks following a better-than-expected national budget. The JSE All Share Index advanced 1.94 percent to around 67 483 points after Finance Minister Tito Mboweni’s Budget speech generated positive sentiment and lifted the markets. The mining index rose 5.47 percent to 66 960 points and resources gained 5.54 percent to 70 371 points, while banks lifted slightly and general retailers stocks were in the red.
South African budget speech 2021: growth over tax increase, but more could have been done
The 2021 budget speech, which was delivered by the Minister of Finance on 24 February, hit the right notes in preferring economic growth over raising taxes as a means to increase tax revenue. This continued a consistent theme from previous budget speeches which acknowledged South Africas relatively high tax rates, and the inverse relationship between higher rates and increased tax revenues. Arguably, the budget announcements prioritise individuals ahead of businesses, which could lead to a longer road to economic recovery and a more gradual increase in tax collections.
Budget 2021/22 – Proposed changes to contributed tax capital rules
Contributed tax capital is defined in section 1 of the Income Tax Act 58 of 1962 (Income Tax Act) and is a key concept in differentiating between dividend distributions and capital distributions (also returns of capital) for tax purposes. Essentially, and without considering some of the more nuanced rules, the contributed tax capital of a company, in relation to a particular class of shares, is the aggregate of all capital that has been paid or contributed to the company by the holders of that class of shares (as shareholders and not as creditors), less so much capital that has been returned to the holders of that class of shares.
Budget 2021/22 – REDUCTION IN CORPORATE INCOME TAX RATE
In the current pandemic effected economic climate, the announcement in the 2021 Budget (Budget) of the reduction in corporate income tax (CIT) from the current rate of 28% provides some relief to companies feeling the pinch of the economic downturn. CIT will be lowered to 27% for companies with years of assessment commencing on or after 1 April 2022 with a view to further CIT rate decreases over the medium term. Whilst still high compared to the global average CIT rate of 23,6%, the reduction seeks to drive growth and encourage investment in the country. In order to implement the reduction in CIT, government intends on reducing the number of tax incentives, expenditure deductions and assessed loss offsets currently available to companies in order to broaden the CIT base. The proposals by the Minister of Finance (Minister) relating to the limitation of assessed losses and excessive interest deductions have been Read More …
Mboweni sticks to a realistic path in 2021/22 Budget
Authors: Wesley Grimm, Joon Chong, Cor Kraamwinkel from Webber Wentzel. South African Finance Minister Tito Mboweni delivered the 2021/22 Budget on Wednesday that treads a pragmatic path between over-spending and too much austerity, as the economy grapples with the impact of Covid-19 and lockdowns. The minister clearly listened to widespread calls to avoid raising taxes but also to allocate more funds to rolling out vaccines. Overall, it was an optimistic budget, but with some stings in the tail.