Tax

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.

High political drama in the opening weeks of Parliament aside, most South African business and personal taxpayers are expecting tax hikes across the board from the Finance Minister’s Budget Speech on 21 February. Government already faces a yawning budget deficit, aggravated by the need to find billions of rand to fund a new and unbudgeted-for commitment to free tertiary education.

Ahead of the 2018 Budget Speech, Treasury’s options to raise revenue are becoming increasingly limited. Treasury will need to think outside the box this year if it is to make any meaningful difference to its current revenue shortfall, estimated to currently stand at around R50.8 billion.

The big question on everyone’s lips however, is twofold: How will cryptocurrency be taxed by the South African Revenue Service (SARS) and what will the exchange control standpoint of the South African Reserve Bank (SARB) be?

The curtains have come down on section 18B of the Value-Added Tax Act, No. 89 of 1991 (VAT Act) and the resultant impact may catch a few residential property developers off-guard.

The National Treasury published the Second Draft Carbon Tax Bill for introduction in Parliament on 26 December 2017, as well as public comment and convening of public hearings by Parliament, which is expected to be early in 2018. Following that process, a revised Bill will be formally tabled in Parliament, which is expected to be by mid-2018.