27 August 2019
Parliament has called for comment on the 2019 Draft Taxation Laws Amendment Bill (TLAB) and the 2019 Draft Tax Administration Laws Amendment Bill (TALAB).
National treasury published the draft bills for comment in July 2019.
According to an earlier treasury statement, the 2019 Draft TLAB and the 2019 Draft TALAB provide the necessary legislative amendments required to implement the more complex tax announcements made in Chapter 4 and Annexure C of the 2019 Budget Review.
The proposed amendments will require extensive public consultation as they do not deal with a “simple change in a rate or threshold of a tax”.
The 2019 Draft TLAB focuses on the following key tax proposals announced in the 2019 Budget Review:
• Aligning the effective date of tax neutral transfers between retirement funds with the effective date of annuitisation for provident funds
• Adjusting the withholding tax treatment of surviving spouses’ pensions to limit tax debts on assessment
• Addressing abusive arrangements aimed at avoiding the anti-dividend stripping provisions
• Clarifying the interaction between corporate reorganisation rules and other provisions of the Income Tax Act
• Refining the tax treatment of long-term insurers
• Refining investment criteria and anti-avoidance measures for the Special Economic Zone regime
• Limiting the allowable deduction for investors investing in a venture capital company
• Reviewing the controlled foreign company comparable tax exemption and addressing the circumvention of the anti-diversionary rules
• Reviewing section 72 of the VAT Act
The 2019 Draft TALAB gives effect to the following key tax proposals:
• Removal of requirement to submit a declaration to a regulated intermediary in respect of tax free investments
• Authorisation for the Commissioner to prescribe rules relating to the making of advance foreign currency payments
• Alignment of time limitations on requesting refunds
• Model mandatory disclosure rules and non-compliance penalties
• Tax compliance certificates
Parliament has also called for comment on the 2019 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill (Draft Rates Bill).
Treasury had sought comment on the proposed legislation in July 2019.
Highlights in the 2019 Draft Rates Bill include changes in rates and monetary thresholds to the personal income tax tables, adjustments to the eligible income bands that qualify for the employment tax incentive and increases in excise duties for alcohol and tobacco.
The standing committee on finance and the select committee on finance also seek comment on the 2019 Draft Income Tax Amendment Bill.
Treasury published the draft bill for comment at the end of July 2019.
According to an earlier treasury statement, the proposed legislation seeks to give effect to Budget announcements on environmental tax incentives.
“The 2019 Draft Income Tax Amendment Bill contains environmental tax incentive announcements made in Chapter 4 the 2019 Budget Review that deal with the repeal of the exemption for certified emissions reductions as well as the extension of the energy efficiency savings incentives.”
The proposed amendments also provide the necessary legislative amendments required to implement the carbon tax, in effect on 1 June 2019.
The draft bill aims to:
• amend the Income Tax Act, 1962, so as to amend a date in a provision;
• repeal certain provisions; and
• provide for matters connected therewith.
The proposed legislation seeks to repeal the tax exemption for certified emission reductions effective from the date on which the carbon tax came into effect.
It also wants to extend the energy efficiency savings incentive to allow for energy efficiency savings deductions from the income of any person carrying on any trade in respect of year of assessment ending before 1 January 2023, effective from 1 January 2020.
Comment on the draft bills is invited until 6 September 2019.
Public hearings on the proposed legislation will be held in parliament on 10 September 2019.
Meanwhile, speaking at the 2019 Tax Indaba, the deputy minister of finance, David Masondo, outlined steps that needed to be taken to restore a sustainable fiscal position for South Africa.
Steps include determining whether South Africa’s tax policy design is suitable for the future based on the key principles of good tax policy design, ensuring that a strong, capable and technologically proficient revenue authority is in place and spending more effectively and deriving visible value for the revenue that is raised.
3 key themes integral to shaping tax policy for the future include inequality, sustainability and the sovereignty of the state.
The deputy minister confirmed that treasury was evaluating tax incentives to determine whether they are meeting their objectives and to ensure that more value is derived from money spent.
He added that the “success of South Africa’s tax policy system and its ability to generate the revenue we require to serve our citizens effectively rests on three important foundations: political leadership, good tax policy design (based on the principles mentioned), and a capable and efficient tax administration”.