Tag: Value Added Tax (VAT)

Following announcement of the actions taken by government to combat the COVID-19 crisis, many South Africans may be aware of the proposed tax measures that are effective from 1 April 2020.

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.

Minister of Finance Tito Mboweni will deliver his 2020 budget speech today. South Africa enters a new decade with a growth forecast of only 0.7% (according to ratings agency Moody’s).

As we approach Budget Speech Day on 26 February 2020, many people are wondering what kind of rabbit Finance Minister Tito Mboweni is going to pull out of his hat this year. Most commentators will talk about ‘bracket-creep’, sin taxes and an increase of 1% to the VAT rate. But the Minister needs to start becoming a little more creative.

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.)

The tax implications of running a business are not widely taught in the South African education system. This is why many entrepreneurs are not well equipped to deal with the taxation side of their businesses in an informed manner.

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'.

On 1 March 2020 the amended section of the Income Tax Act concerning the foreign employment income exemption comes into effect. This so-called 'expat tax' has caused concern among South Africans working abroad who currently pay no tax if they meet certain criteria. But, from next year, only R1 million of this income will be exempt from tax here.

The indirect taxation of cross-border e-commerce transactions have been high on the agenda for tax authorities worldwide. There is clearly a perception that much of these transactions are escaping indirect tax (essentially VAT) because the supplier and consumer are in different jurisdictions.

When you get audited by SARS, before payment of your Value-Added Tax (VAT) refund, expect a long road accompanied by lots of frustration. Adding to this is that usually when a refund is claimed, it is often when your business really needs the cash flow.