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2023 Legal and Policy

Legal and Policy - 23 February 2023

Description

SARS:

  • 22 February 2023 – Income Tax Act, 1962

2023 Budget FAQs – Solar Panel Tax Incentive for Individuals

  • 22 February 2023 – National Legislation

The 2023 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill has been introduced in the National Assembly by the Minster of Finance on 22 February 2023

  • 22 February 2023 – Income Tax Act, 1962

In view of the Budget announcement, the withdrawal of these two Practice Notes is postponed to 1 March 2024.

  • 22 February 2023 – National Legislation

Taxation Proposals as tabled by the Minister of Finance in his Budget Review 2023 at 14:33

  • 22 February 2023 – Income Tax Act, 1962

The income tax notices, scheduled for publication in the Government Gazette, relate to the –

  • fixing of rate per kilometre in respect of motor vehicles – section 8(1)(b)(ii) and (iii);
  • determination of the daily amount in respect of meals and incidental costs for purposes of section 8(1)(c)(ii) (overnight allowance); and
  • determination of the daily amount in respect of meals and incidental costs for purposes of section 8(1)(a)(ii) (daily allowance).

Publication details will follow in due course

The highlights for this year are:

  • Granting tax relief by adjusting personal income tax brackets and rebates for the effect of inflation
  • An expanded tax incentive for businesses of 125% of the cost of renewable energy assets used for electricity generation, brought into use during a period of two years from 1 March 2023
  • A tax rebate to individuals for solar PV panels of 25% of the cost for a limited period, subject to certain conditions, and capped at R15 000 per individual
  • Adjustments to tax tables for transfer duty, retirement fund lump sum benefits and retirement fund lump sum withdrawal benefits, for the effect of inflation
  • Increases of 4.9% in excise duties on alcohol and tobacco
  • No changes to be general fuel levy and road accident fund levy
  • The increase of the health promotion levy on beverages to 2.3 cents per gram of sugar is delayed until 1 April 2025.
  • 22 February 2023 –The South African Revenue Service (SARS) accepted the increased revenue collection estimate announced by Minister of Finance, Mr Enoch Godongwana. In his 2023 Budget Speech, the Minister increased the revenue estimate to R1.69 trillion, an increase of R93.7 billion from the 2022 February Budget statement.

The fiscal space for the Minister to increase the revenue estimate proves the resilience of South Africa’s tax base and the focused performance of SARS in fulfilling its mandate. Through its administrative efficiencies, SARS has and continues to deploy a number of targeted and focused compliance efforts aimed at shaping the overall compliance landscape. This is carried out by skilled personnel, technology, artificial intelligence and machine learning.

The improved revenue collection has enabled the Minister to provide tax relief in excess of R20 billion to both individuals and companies to support the response to energy challenges and to account for inflation tax adjustment. For individuals this will include tax relief in the installation of solar panels and expansion of a renewable energy tax incentive for companies. The diesel fuel relief is used to counter the adverse effect of the increased in food prices.

It is encouraging that the recently independent conducted Perception Survey reported increased trust and confidence in the work of SARS to 74%. This improvement communicates the solidifying of a compact between taxpayers and SARS. SARS will continue to work very hard to provide clarity and certainty to taxpayers by making it easy and seamless to transact with the organization.

SARS has begun to lay a firm foundation to achieving the increased revenue estimate through the synthesis of data driven insights, artificial intelligence and technology infrastructure. Increasingly the work of our skilled staff is augmented by artificial intelligence, while routine work is automated.

This is a journey of a reimagined SARS that is “a SMART modern SARS with unquestionable integrity, trusted and admired”. Such technology and tools help to provide clarity and certainty and make it easy and seamless to transact with SARS as well as to detect and deter fraud. This also serves to improve service to taxpayers in line with our motto of “the best service is no service at all”, which reflects our service obsession.

This new technology has seen more than 3 million taxpayers being Automatically Assessed, and an accelerated payment of refunds to 75% of taxpayers within 72 hours. This proves the important intersection of human effort and technology for the benefit of taxpayers.

The High Wealth Individual and Large Business and International Divisions have positioned SARS to continue to provide segmented and customised services to individuals and businesses. This will help these segments to improve their compliance and enhance revenue collection. SARS is increasing its focus on all areas of compliance, including local and foreign base erosion and profit shifting.

SARS is also working closely with other revenue administrations through the Automatic Exchange of Information about offshore accounts held by many South Africans. Many High Wealth Individuals, as observed through their declarations and disclosures, often mask their true wealth. SARS will continue its dedicated focus on this segment.

Taxpayers are encouraged to regularize their tax affairs by taking advantage of the Voluntary Disclosure Programme (VDP) to a qualifying individual, company or trust that seeks to voluntarily disclose their tax affairs. This step is aligned to the SARS’ strategic objective, which seeks to provide clarity and certainty as well as make it easy and seamless for taxpayers and traders to comply with their obligations.

Since the 2022 Budget Speech, the economic challenges facing the country have become a massive obstacle to economic growth, job creation, as well as reducing poverty and inequality. SARS revenue collection remains the mitigating factor that allows for a stable fiscal framework.

There is real risk facing the economy. Loadshedding has a measurable impact on the economy that directly affects revenue collection. The intermittent electricity supply affects the overall profitability and limits growth of big and small businesses. However, loadshedding also provides new opportunities as government intends to bolster the use of renewable energy. As large business to some degree shifts towards self-generation of energy, this will have positive spin-offs for SARS through possible imports.

Our economy is faced by massive challenges. Despite the challenges, the finance, real estate and business segments have remained buoyant with a growth rate of 4%. The contribution of transport and communication have continued to grow by 8.9%. The manufacturing sector is also showing positive signs, albeit from a low base. The mining sector has begun to show signs of decline, but its contribution remains significantly higher than the pre-COVID era.

Corporate and personal income taxes as well as trade taxes are expected to contribute significantly to the increased revenue collection. In line with the SARS revenue management system the additional revenues are a function of tax administration efficiencies as well as improving taxpayer compliance behaviour.

We welcome the Minister’s announcement of additional funding to SARS, which will be used for upskilling our skills base and to expedite our modernisation journey, in particular to greatly enhance our capacity and capability to fight the illicit economy, especially illicit cigarettes, fuel and alcohol.

SARS believes that most taxpayers are honest and will comply when provided with assistance to meet their legal obligations. Whilst many taxpayers have shown signs of moving towards the SARS strategic intent of voluntary compliance, there is still unfortunately more work that needs to be done to address those taxpayers that are still non-complaint.

After years of State Capture and repurposing of the organization to deal with corruption, SARS continues to make significant improvement. The revenue expectations of the Minister represents his confidence in the rebuilding of SARS and purposeful steps to implement a compliance programme which continues to yield amazing results.

SARS makes it hard and costly for those taxpayers who remain wilfully non-compliant. There has been steady progress over the past three years. For the year to date until the end of January 2023 we witnessed more than 4,742 customs seizures amounting to R2.9 billion. Overall, customs compliance efforts secured R10.4billion through compliance efforts, made up of R3.8 billion cash and prevented leakages of R6.6 billion. SARS has handed over 178 cases to the National Prosecuting Authority (NPA). There are 94 finalised cases with 92 guilty verdicts of which 10 had sentences of direct imprisonment, totalling 75.5 years to be served, with 2 acquittals. The conviction rate is 97.8%.

In light of a changed and changing environment, SARS continues to explore all avenues of revenue collection. Our world of work has changed irrevocably. There are new sectors of the economy that were never envisaged, and our legislative environment has not been sufficiently adjusted for this new world of work.

The Gig Economy, the role of social media Influencers and expanding digital economy, has changed the paradigm used to define the world of work and leisure. Increasingly the hybrid model of working from home and office has become a norm. Therefore, this will be an area of focus for SARS.

The movement of people and capital in and out of countries is linked to the globalised world we live in and is not uniquely South African. Data at our disposal does not convey a phenomenon of massive migration. We are seeing equal movement of people and capital in and out of our country. While this is one area to be watched, the net tax impact has remained neutral.

SARS will spare no efforts in doing all in our power to carry out our revenue collection mandate in pursuit of our Higher Purpose, which is to collect all revenue that is due to enable government to build a capable state that serves the citizens of our country and facilitate legitimate trade.

  • 21 February 2023 – Achieving our Vision 2024 of a smart, modern SARS with unquestionable integrity that is trusted and admired is of paramount importance. Pivotal to the delivery of our vision are our digital platforms & technology infrastructure. In order to provide clarity & certainty, make it easy for taxpayers & traders to comply with their obligations and building public trust and confidence, our technology assets have to demonstrate the highest levels of availability, robustness and security.

Pursuant to our Vision and Strategic Objectives, which include modernising our systems to provide Digital and Streamlined online services, we are hard at work ensuring that our digital platforms & technology infrastructure are available, robust & secure, by performing regular upgrades, enhancements and maintenance.

In the light of the above, system upgrades are scheduled for Saturday, 25 February from 14:00 until 18:00. During this time various Tax Products may not be available.

  • 17 February 2023 – As communicated on 14 February, a reminder of the impact of the upgrade of the eFiling platform. In our pursuit of achieving Vision 2024 of a smart, modern SARS with unquestionable integrity that is trusted and admired, our vision is underpinned by 9 strategic objectives, and of importance in this regard is Strategic Objective 6, which deals with availability of our digital channels and no security breaches due to known risks.

Pursuant to these strategic objectives, and delivering on our important services, we are working hard to ensure that our digital platforms and technology infrastructure are secure, and free of known vulnerabilities by performing regular maintenance.

Planned maintenance will take place on Friday, 17 February 2023 from 20:00 until 6:00 on Saturday morning. During this time frame, you may experience intermittent service interruption on eFiling. We apologise for any inconvenience that may be caused.

  • 17 February 2023 – Customs & Excise Act, 1964: Publication details for tariff amendment notice R3061, as published in Government Gazette 48067 on 17 February 2023, are now available.
  • 17 February 2023 – The Pinetown branch closed (17 February 2023) at its current address of 36 Kings Road.
    Pinetown. It will be reopening as a Pop-up Branch at Union Main Centre (parking area), 45 Josiah Gumede Road, Pinetown on 20 February 2023. Operating hours: 08h30 – 15h00 Monday, Tuesday, Thursday and Friday; 09h30 – 15h00 Wednesday. All current services will be offered at the new location by appointment.
  • 16 February 2023 – Customs & Excise Act, 1964: The tariff amendment notice, scheduled for publication in the Government Gazette, relates to the amendments to –

Part 1 of Schedule No. 1, by the insertion of various 8-digit tariff subheadings in Chapter 30, for vaccines used in the Expanded Programme on Immunisation for both national and provincial Departments of Health.

Publication details will be made available later

NATIONAL TREASURY:

OECD:

SAFLII:

Farber v Commissioner for the South African Revenue Service and Another (11142/2020) [2023] ZAGPPHC 88 (16 February 2023)

AuthorSAICA
DivisionLegal and Policy
Date23 February 2023