Tag: Corporate Income Tax (CIT)

Moody’s finally dropped the sword on South Africa on Friday evening, following in the steps of fellow ratings agencies S&P and Fitch in downgrading the country’s sovereign credit rating to sub-investment grade or 'junk status'. And the COVID-19 crisis and current lockdown mean that even before factoring in the impact of Moody’s decision, the economic outlook for SA in 2020 is harrowing.

Given the worsening economic realities still facing the Minister of Finance this year, it came as a pleasant surprise that he provided 5.2% adjustments to the individual tax brackets and rebates, resulting in real personal income tax relief for the already stretched individual taxpayers. 

Budget statements have in recent years perennially made downward revisions in economic growth projections. Disappointing growth outcomes compared to official forecasts is partly attributed to the inability to implement planned structural reforms that would have delivered improved growth outcomes.

Finance Minister Tito Mboweni delivered a macabre Medium-Term Budget Policy Statement (MTBSP) to Parliament on October 30. The MTBPS communicates to government and the people the economic context of the country and fiscal spending priorities over the coming three years. (It does not include detailed spending plans or tax proposals, which are left to the main budget in February.)

In addition to the tax payable, SARS can impose penalties on a taxpayer for an 'understatement'. In a standard case, and depending on the taxpayer’s behaviour, penalties can range from 10% for a 'substantial understatement' to 150% for 'intentional tax evasion'.

As an election year, a second State of the Nation Address (SONA) will probably be held during June 2019 wherein the newly elected government will present their programme of action for the 2020 financial year. The SONA address that was delivered by President Cyril Ramaphosa on Thursday 7 February 2019, accordingly reflected on the Medium Term Strategic Frameworks designed and implemented in the past five years.

A new SA-TIED research study estimates that South Africa loses about 7 billion ZAR a year due to profit shifting by multinational corporations; amounting to about 4% of total current corporate income tax receipts.

Tax authorities could do more to realise the full potential of new technology to reduce the tax compliance burden on taxpayers, according to the 2019 edition of the annual Paying Taxes 2019 Report, produced by PwC and the World Bank Group.

A major concern on the minds of business and the public in general is how tax revenue collections are performing and whether we can expect further tax increases in the 2019 Budget.

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.