Several tax policy changes in the pipeline

While the rebuilding of Sars continues.
Image: Shutterstock

The rebuilding of the South African Revenue Service (Sars) is continuing with the appointment of close to 500 people across various levels and skills areas and critical investments in its technology infrastructure.

Finance Minister Enoch Godongwana says work at the tax authority to counter criminal and illicit activity has resulted in collections of more than R5 billion through enforcement activities.

Watch/read: Finance minister delivers the Budget 2022 speech

Sars has raised assessments of R18 billion additional duties, cancelled the trading licenses of three operators, liquidated one operator, and referred eight cases for criminal prosecution.

Sars has also invested R430 million in refreshing and modernising its information and technology infrastructure. Taxpayers have in recent months complained about delays in the payment of legitimate refunds, system failures and a lack of guidance from Sars, despite an overload of correspondence.

A discussion document on the broader governance and oversight reforms recommended in the Nugent and State Capture Commissions will soon be published for comment.

Read: Bain, Zuma and Moyane colluded to seize and restructure Sars

Government has initiated several reviews, including a review of all businesses that received payments from national and provincial government over the past five years.

It has revealed several cases of non-compliance. It enabled Sars to register businesses for tax purposes that were not previously in the tax net. This has also boosted revenue collections.

Review of incentives

Government is also continuing with its review of incentives and their efficiency. “Those found to be effective, and which create the intended benefits will be retained and, where necessary, redesigned to improve performance,” the minister says in his 2022 Budget Review.

The research and development incentive will be extended in its current form until the end of next year. A discussion document has been published for public comment and a workshop will be held during the year.

However, several corporate tax incentives will not be renewed when they reach their sunset date. These include:

  • Section 12DA (rolling stock) on February 28, 2022
  • Section 12F (airport and port assets) on February 28, 2022
  • Section 12O (films), which lapsed on December 31, 2021
  • Section 13sept (sale of low-cost residential units through an interest-free loan) on February 28, 2022.

Carbon tax

National Treasury also announced an increase in the carbon tax rate from R134 to R144 per ton of carbon dioxide and the carbon fuel levy will increase to 9c/l for petrol and to 10c/l for diesel. This will be effective from April 6.

The first phase of the carbon tax will be extended by three years from January next year until December 31, 2025.

Sugar tax

Despite calls for the scrapping of the sugar tax because of the devastating impact on employment, Godongwana has decided to increase it.

The “health promotion levy” for drinks with more than 4g of sugar will be increased from 2.21c/g to 2.31c/g from April this year. Government is also going to consult with industry players on the lowering of the threshold and extending the levy to fruit juices.

Plastic bags are going to cost shoppers more with an increase from 25c/bag to 28c/bag from April this year. Treasury will also investigate a tax on single-use plastics.

The minister has been silent on pleas for government to address tax policy around remote work but promises to publish a discussion document on the matter during the year.

Retirement

Government seems adamant to continue with the proposal regarding the tax treatment of retirement interest when changing tax residence. It intends to initiate the renegotiation of multiple tax treaties to ensure it gets its share of tax on the retirement interest.

Treasury is currently reviewing public comments on the discussion paper relating to the two-pot retirement system and will be holding public workshops before legislative changes are made.

Government will also review the approach to adjusting threshold for inflation and will be publishing review papers on the alcohol and tobacco excise duties policy framework shortly.

The excise duties on alcohol will increase by between 4.5% and 6.5% and for tobacco between 5.5% and 6.5%. A bottle of wine will cost 17c more and a packet of cigarettes R1.03 more.

At least the medical tax credits will increase to R347 per month for the first two members and to R234 for the additional members.

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Moneyweb is a financial, investment news provider and not a tax- or financial advice authority. Please contact Sars or a registered tax practitioner for any tax-related queries.
 
 

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