Tax

The VAT hike as part of the 2018 Budget Speech poses the risk of eroding the spending power of poor and lower-income households, exacerbating poverty and increasing inequality. VAT is a regressive tax - Value added tax (VAT) – charged on most goods and services at a rate of 14% – is levied irrespective of how much somebody earns, making it a regressive tax.

While the necessary legislative provisions to give effect to the proposed increase are still to be adopted by Parliament, one can accept that the Minister's proposal to increase VAT from 1 April 2018 will be implemented. A number of important issues need to be considered to ensure a seamless transition.

South Africa has specific anti-tax avoidance legislation aimed at South African owned foreign companies. This so-called controlled foreign company tax legislation in essence aim to tax the notional taxable income of a foreign company in the hands of its South African shareholders.

What will the 2018 Budget Speech mean for your business? Our experts share their insights. Join the conversation on Twitter #SABudget2018.

Personal income tax - When looking at the changes to personal income tax in isolation (i.e. ignoring the increase in the VAT rate and the usual increases in “sin taxes”, the news in the budget was probably as good as could have been expected.

PwC’s tax comments on the 2018 Budget Review: Indirect Tax.

Finance Minister Gigaba delivers 2018/19 Budget Speech. 1% hike in Value-added tax (VAT) increased by 1% to 15%. Government spending cut over the next three years amounting to R85 billion. Fuel levy increase 52 cents a litre. R57 billion will be spent over the next three years to fund higher education

The Finance Minister's key focus should be to reduce expenditure, reduce the over bloated state and avoid raising taxes, which deter job creating investment and savings. He should consider a flat tax system, introduce labour friendly policies, and adopt the FMF 8-point plan for Radical Economic Transformation (RET).

In this year’s Budget, I’d like to see a number of things: I would like to see attention being focused on travel allowances and taking the process of travel reimbursements to its logical conclusion. I would like to see the Employment Tax incentive Act continuing for the sake of the youth of the country… What I’m scared of in the Budget is the raising of personal income tax rates.

Transfer pricing relates to the transfer of goods or services between members of a multinational group which are tax residents in different countries. Instead of increasing existing taxes or levying new taxes, a way to tackle the looming budget deficit may be to properly implement transfer pricing rules and to ensure appropriate enforcement by the South African Revenue Service (SARS) of such rules.