Tax insights

According to data published by Statista, a German company specialising in market and consumer data, a cumulative amount of approximately 915 000 South Africans emigrated from South Africa as of 2020. Based on experience, there has been a noticeable increase in individuals seeking tax advice in connection with emigration over the past couple of years.

This year's individual tax filing season began on 1 July, and taxpayers should be aware that the South African Revenue Service ("SARS") has made several changes to the tax return submission process.

With the introduction of Bitcoin as the first decentralised cryptocurrency back in 2009, digital assets have taken on various forms, from traditional cryptocurrencies to NFT’s and have steadily gained popularity throughout the world. 

The Taxation Laws Amendment Act of 2021 was published and promulgated on 19 January 2022. One of the potentially most significant changes arising are amendments specific to the rules around the limitation of interest deductions in respect of debts owed to persons not subject to tax.

In December 2021 SARS released a document setting out a proposed model for establishing an Advanced Pricing Agreement Program (“APA program”) in South Africa combined with draft legislation specific thereto. In this regard SARS had previously issued a draft discussion paper on the introduction of an APA program in 2020.

South Africa applies withholdings taxes (“WHT”) on royalties from a source within South Africa paid by any person, resident or not, to a foreign person, as well as on interest from a source within South Africa and also dividends. All these WHT’s can potentially be reduced or eliminated by the application of a double taxation treaty (“DTA”).

The provisions of Section 7C of the Income Tax Act referring to instances of deemed donations have now been effective for a number of years. Over that time, SARS has extended the scope of the provisions to counter different measures being adopted by certain taxpayers to escape their exposures.

Finance Minister Enoch Godongwana presented his first budget speech on 23 February 2022. He claims that the budget strikes the critical balance between saving lives and livelihoods, while supporting economic growth.

Our Minister of Finance Enoch Godongwana will be presenting his first budget speech on Wednesday 23 February 2022. He is presenting this budget in a strained economic environment, impacted by events such as the Covid pandemic as well as the civil unrest last year.

Recent advancements in digitalisation and the use of data have transformed the way that businesses engage with global revenue authorities. Today, tax and customs authorities have an increasing ability to automatically process and analyse information supplied by taxpayers.

Historically, transfer pricing legislation and regulations in Africa have been limited. Many African jurisdictions have chosen to tax cross-border transactions using tools such as withholdings tax regimes, and therefore transfer pricing principles have generally taken a back seat to date, however there are signs that this is changing.

The rules of global taxation are on the brink of change for the first time in nearly 100 years. The leaders of the Organisation for Economic Co-operation and Development (OECD) G20 met in Rome on 30 October 30th 2021 to finalise the agreement for a global minimum tax.

The OECD recently issued a Statement on a “Two Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy”. The OECD/G20 Inclusive Framework, agreed to by more than 130 countries is the OCED’s and G20’s vision for the international tax future. There are two aspects (referred to as “Pillars”):

The release of the 2021 Draft Taxation Laws Amendment Bill (Draft TLAB) and the 2021 Draft Tax Administration Laws Amendment Bill (Draft TALAB) at the end of July will result in corporate taxpayers crunching hard at their numbers.

During the Covid-19 pandemic, the Solidarity Fund was established as a Public Benefit Organisation (“PBO”) with a mandate to support the national health response, contribute to humanitarian relief efforts and mobilise South Africans in the fight against Covid-19.