Tag: Corporate Income Tax (CIT)

The shocks, surprises and shortfalls in the initial budget on 19 February 2025 made way for a reworked National Budget. This new budget is marked by cuts, compromises and curveballs. Although Finance Minister Enoch Godongwana’s first budget attempt was unexpectedly stopped three weeks ago, a higher VAT rate is still on the table.

Parliament tabled the 2025 budgets on 19 February 2025, but they were not approved. The budgets proposed a 2% increase in the Value Added Tax (VAT) rate. The proposal suggested raising the VAT rate from 15% to 17%.

The South African Revenue Service (SARS) has marginally improved refund payment time frames, but it needs to prioritise improving service delivery and building trust with taxpayers. In his recently delivered Medium-Term Budget Policy Statement (MTBPS), Finance Minister Enoch Godongwana announced a tax revenue shortfall of R22.3 billion.

With the budget speech being delivered in an election year, I expect to hear populist promises and over-optimism which is geared more to voters than the financial markets. We will need to scrutinise the numbers coming out of the budget very carefully to see if Finance Minister Enoch Godongwana’s budget proposals are viable and achievable given the country’s high debt burden and strained tax base.

The South African taxi industry, a cornerstone of the nation's transport landscape, has long been under scrutiny for its apparent underpayment of taxes. However, a closer examination reveals a more complex reality. In 2021, the industry paid only R5 million in annual Corporate Income Tax (CIT). This is a small amount compared to the industry’s estimated annual revenue of R90 billion.

The National Budget delivered by South Africa’s Minister of Finance, Enoch Godongwana, showed that government is making some significant financial commitments to restore Eskom to viability and maintain social grants. But with GDP growth projected at 1.4% on average from 2023 to 2025, and a potential tapering-off of the commodities boom over the medium term, how will government fund these commitments?

On Wednesday afternoon, the Minister of Finance, Enoch Godongwana, had the unenviable task of delivering the annual Budget Speech. Over the last year, and especially over the last few months, South Africa has taken one knock after another.

The 2023 Budget was tabled to Parliament on 22 February 2023 by South African Finance Minister Enoch Godongwana.

Taxes are never pleasant, but they can do a lot of good if used in the right way, such as providing access to education and healthcare for the poor through vouchers. Taxes can also do a lot of harm by dissuading savings and investments, which ultimately leads to less jobs and a reduced ability for people to take care of their own needs. This is especially the case when it comes to dividend withholding tax and personal income tax.

Given the ever-changing landscape of the past two years, the adage that nothing is certain except death and taxes is perhaps more apposite than ever. Whilst it may appear that a semblance of normality is returning, its almost as certain as death and taxes, that remote working will be a part of the next normal.