“The headline corporate tax rate is already relatively high compared to our main trading partners and other middle-income countries. 22 Feb. Tax Changes Coming For South African Expats . Remuneration for services rendered outside South Africa With effect from 1 March 2020, South African residents working abroad for more than 183 days over a 12-month period, and for a continuous period of more than 60 days during that period, are exempt from income tax on remuneration for services “An expansion of the list of goods that are subject to ad valorem duties is possible. The South African Reserve Bank reduced the “repo rate” (the benchmark interest rate at which the Reserve Bank lends money to other banks) by 100 basis points (i.e., 1%) on 20 March 2020, 100 basis points effective 15 April 2020, 50 basis points on 22 May 2020 and 25 basis points on 24 July 2020 in response to the coronavirus (COVID-19) pandemic. Subscribe . Ryan Brothwell 28 February 2020. South African expatriates should not only understand the new expatriate tax law, which endangers th... See More. Share . “Ex Africa Semper aliquid novi,” winning requires hard work, focus, time, patience and resilience. The lockdown was partially eased from 1 May 2020, eased further from 1 June 2020 and 18 August 2020 and eased again with effect from 21 September 2020. Pay-As-You-Earn (PAYE) was down in April 2020 by 5.2% compared to the same month in 2019, with more than 65 000 employers skipping the deadline to a tax value of R3.8 billion. The South African Reserve Bank reduced the “repo rate” (the benchmark interest rate at which the Reserve Bank lends money to other banks) by 100 basis points (i.e., 1%) on 20 March 2020, 100 basis points effective 15 April 2020, 50 basis points on 22 May 2020 and 25 basis points on 24 July 2020 in response to the coronavirus (COVID-19) pandemic. Dear customer, Effective on 1 st July 2020, Huawei Services (Hong Kong) Co., Limited is a registered Value Added Tax ("VAT") vendor with the South African Revenue Services ("SARS") in compliance with the South African Value Added Tax Act No. The carbon tax is administered as an environmental levy on carbon emissions, which requires that every person operating emissions-generation facilities at a combined capacity equal to or above the legislated carbon tax threshold, must register with the South African Revenue Service and obtain a consolidated license for the combination of emissions facilities that generate emissions subject to the carbon tax. If you are 65 years of age to below 75 years, the tax threshold (i.e. The changes will mean that someone earning R460,000 a year will see their taxes reduced by nearly R3,400 over the next year. Payments to residents. The deferred PAYE liability must be paid to SARS, in equal instalments, over the six month period beginning on 1 September 2020 (i.e. In this regard, taxpayers need to consider repo rate movements when preparing various tax calculations (including but not limited to thin capitalization or section 23M and 23N calculations). Recently proposed amendments and other changes in Value Added Tax for 2020. Relief from the filing and payment requirements for the carbon tax was announced on April 21, 2020, in response to the coronavirus (COVID-19) pandemic. The content will be updated on a regular basis. 2/27/2020 On February 26, 2020, South Africa’s Finance Minister, Tito Mboweni, presented before Parliament the country’s 2020 Budget, which includes a proposal to restrict deduction of interest expenses. The South African Reserve Bank reduced the “repo rate” (the benchmark interest rate at which the Reserve Bank lends money to other banks) by 100 basis points (i.e., 1%) on 20 March 2020, 100 basis points effective 15 April 2020, 50 basis points on 22 May 2020 and 25 basis points on 24 July 2020 in response to the coronavirus (COVID-19) pandemic. The tax year ends on 29 February 2020 and there is still time to pro-actively manage your current and future tax burden. Medical tax credits – No increase expected. PwC said that this will raise an additional R1 billion in tax revenue. The proposed amendments are set to take effect on 1 April 2021. A “qualifying taxpayer” is defined in the revised Bill as: For “qualifying taxpayers” the Disaster Management Tax Relief Administration Bill provides: The requirement in relation to the R100 million gross income limit will be deemed to have been met if the Commissioner for SARS is satisfied that the taxpayer’s estimate of the gross income for that year of assessment, when making a reduced payment under the Tax Relief Administration Bill, was seriously calculated with due regard to the factors having a bearing thereon and was not deliberately or negligently understated. Click anywhere on the bar, to resend verification email. This deferral applies to employees’ tax amounts deducted or withheld during the period commencing on 1 April 2020 and ending on 31 August 2020 i.e. South Africa: Proposed changes to tax-exemption rules The 2020 Draft Taxation Laws Amendment Bill (released 31 July 2020) proposes a change to the conditions for an income tax exemption for scholarships and bursaries granted to relatives of employees—and specifically that the exemption not be based on a salary-sacrifice basis. Our apologies for the inconvenience. Personal Income Tax (PIT) Company Income Tax … The definition of retirement was expanded to include "termination of employment due [to] attaining the age of 55 years, sickness, accident, injury, incapacity, redundancy or termination of the employer's trade." The South African Revenue Service provides approved exchange rates in Binding General Ruling 11 (BGR 11) for determining the rand equivalent of a supply when a standard-rated invoice is issued in a foreign currency. As an alternative to a higher VAT rate on luxury goods, rates of ad valorem excise duties, which are applied to some goods that are consumed mainly by wealthier households, were raised in the 2018 Budget. South Africa’s National Treasury on 23 April 2020 issued a statement concerning value added tax (VAT), The VAT relief includes the following: Fast-tracking of VAT refunds, with “smaller VAT vendors” in a net VAT refund position being allowed temporarily to file monthly VAT returns instead of bi-monthly returns. “Moreover, with the likely VAT increase in the 2020 Budget, this attention is likely to increase. Foreign dividends received by individuals from foreign companies are taxable at a maximum effective rate of 20%. South African taxpayers can let out a sigh of relief. New tax changes will make it easier to take your money out of South Africa. International travel is permitted from 1 October 2020. Leisure travel from high risk countries is however prohibited. Finance Minister Tito Mboweni delivered his National Budget Speech on 26 February 2020, leaving South African taxpayers pleased by the implementation of tax relief on personal income tax, but disappointing those who indulge in alcoholic beverages and heated tobacco products. No interest or penalties will be levied by SARS as a result of the reduced payment; and. STT also applies to unlisted securities. Included in the Disaster Management Tax Relief Administration Bill are measures to provide for the extension of certain time periods set out in Tax Acts covered by the Tax Administration Act. The civil servant wage bill be hit. Member firms of the KPMG network of independent firms are affiliated with KPMG International. With effect from 1 April 2020, the period of the National Lock Down (lockdown period) being the period from 26 March 2020 to 30 April 2020 will be regarded as “dies non” - that is, a day that has no legal effect and must not be taken into account when determining the number of days that are provided for in any Tax Act or in the Tax Administration Act. This guide takes an in-depth look at the timeline of the new tax rules and how they are designed to work. KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity. It is expected that this could raise an additional R13 billion in tax revenue. Please refer to the date of accuracy and refer to the relevant links, under additional information, for original source information. South Africa has a residence-based tax system, which means that residents are taxed on their worldwide income, regardless of where that income was earned. However, due to the fast-moving pace of change, it may not always reflect the most current developments in a given jurisdiction. Small business corporations (i.e. In her latest interview on POWER 98.7, Roxanna Naidoo (Admitted Attorney at Tax Consulting South Africa) discussed how these changes will affect taxpayers. President Cyril Ramaphosa signed off on 3 tax proposals that were given last year. As its debt burden grows at an alarming rate, government plans to slash its own spending instead of hitting embattled South Africans with more taxes. 13 Aug - Mauritius: Finance Bill 2020 enacted. 17 Aug - South Africa: Proposed changes to doubtful debt allowance rules, lease receivables. Personal Income Tax (PIT) Company Income Tax (CIT) Value-Added Tax (VAT) Import VAT and customs duties. Subscribe . The provisions do not extend the time period within which taxpayers are required to produce relevant material by way of written submission. Recent budget proposals indicate that tax treatment of interest deductions and other financial payments are a focus area for the South African Revenue Service (SARS). “On the basis that an increase in PIT rates would be ill-advised, it follows that an increase in the dividends tax rate would also be inappropriate.”, Personal Income Tax (PIT) – No fiscal drag relief. It is expected that this policy will be continued and, as was the case in the 2019 Budget, taxpayers can expect to see no increase in medical tax credits. SOUTH AFRICA. there is a deferral of 35% of the PAYE liability, without SARS imposing administrative penalties and interest for the late payment thereof. Examples of exceptional circumstances include the collapse of a foreign currency or a fluctuation in a foreign currency of 10% or more within the month referred to in options (2) and (3). Global Tax & Legal & Mobility Virtual Meeting Series. Changes to the personal income tax filing season 2020/21. In the 2018 and 2019 Budgets, it was stated that below-inflation increases in the medical tax credit over the three years following 2018 would assist government in funding the rollout of National Health Insurance. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. Indirect Tax News - October 2020. The balance (being 35% of taxable income for the year of assessment) would need to be paid in full when making the third provisional tax payment i.e. Background. Royalties and know-how payments made to non-residents for the use of or right to use IP rights in South Africa are deemed to be from an SA source. the first payment must be made by 7 October 2020; with the last payment being received by SARS by 5 March 2021). You will not receive KPMG subscription messages until you agree to the new policy. South Africa’s SARS, South African Revenue Service, has introduced new rules about the reform of the foreign employment income tax exemption for South African residents overseas, which is often called ‘expat tax’ for short. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. In South Africa, a tax invoice for a supply subject to VAT (at the standard rate of VAT) must be issued in the rand. When this ratio falls below 95%, these taxpayers would now be compelled to apply the standard turnover-based method of apportionment in determining the percentage of VAT which they can claim, which will result in the limitation of input VAT. PwC has published its tax predictions for the 2020 Budget Speech, with the group predicting a number of increases as government battles to fight a growing budget deficit. At the moment, South Africans working abroad for more than 183 days (of which 60 days are consecutive) were able to earn income free of South African tax. Last reviewed - 10 December 2020. The tax year ends on 29 February 2020 and there is still time to pro-actively manage your current and future tax burden. If you are 65 years of age to below 75 years, the tax threshold (i.e. Related content. 13 Aug - South Africa: Proposed changes to tax-exemption rules for employer-provided scholarships, bursaries. The monthly average rate for the month preceding the month during which the time of supply occurs. New tax changes will make it easier to take your money out of South Africa. This page offers an overview of tax developments being reported globally by KPMG member firms in response to the Novel Coronavirus (COVID-19). “No changes are therefore expected in this regard,” PwC said. • The 2020 Budget proposes total consolidated spending of R1.95 trillion in 2020/21, with the largest allocations going to learning and culture (R396.4 billion), health (R229.7 billion) and social development (R309.5 billion). 1000. For more detail about our structure please visit https://home.kpmg/governance. 29th February 2020 27th February 2020 by Editor *This content is brought to you by Sable International. Posted at 07:20h in Uncategorized by admin 0 Comments. Without urgent action, national debt could exceed 140% of … STT applies to a transfer of any security issued for a company or CC incorporated, established or formed in South Africa, as well as any other company listed on an exchange in South Africa. There are prescribed time periods within which the movable goods must be exported and the documentation in support of the export must be obtained. a day that has no legal effect. 17 Aug - South Africa: Proposed changes to doubtful debt allowance rules, lease receivables. Financial emigration is the process used by many South Africans abroad to formalise their non-resident status for both tax and exchange control purposes, and which is set to be amended, as mentioned a year ago in Budget 2020, and come into effect on 1 March 2021. 04 March 2021 Jana Botha, Tax Consultant and Keketso Kgomosotho, Candidate Attorney, Tax Practice, Baker McKenzie Johannesburg. “It is possible, given that CGT is perceived to be a tax on the wealthy as well as pressures on government to increase taxes on the wealthy, that the inclusion rate could be increased to 50% (with the result that the maximum effective CGT rate for individuals would increase to 22.5%). Looming Tax Changes For South Africans: What You Should Know. Taxation Law Amendment Bill and other changes in Value Added Tax for 2020. Daily Weekly Monthly Yearly Periods worked. The Road Accident Fund (RAF) is projected to become government’s largest contingent liability by 2021/22, despite receiving an ever-increasing share of combined fuel tax revenues. Landlords generally would not have a problem with regard to claiming all input VAT on the expenses they incur. “Any increase in the CIT rate would negatively impact on the competitiveness of South Africa’s tax rates (the global trend for corporate tax rates is downwards) and would not be in line with the objective of promoting economic growth,” it said. Looming Tax Changes For South Africans: What You Should Know. South Africa has confirmed that it is forging ahead with its plans to introduce an ‘expat tax' amendment to the South African Income Tax Act by March 2020. Book an appointment. Royalties payable to non-residents. Read More: South Africa’s President Takes On Its Unions. The potential tax, legal and mobility implications of COVID-19. South Africa’s SARS, South African Revenue Service, has introduced new rules about the reform of the foreign employment income tax exemption for South African residents overseas, which is often called ‘expat tax’ for short. These changes were intended to target those South Africans working overseas on expat contracts, who had not formally emigrated and were intending to return ‘home’ to SA at a later stage. The emission facilities will be licensed as a “customs and excise manufacturing warehouse”. 11 Aug - South Africa: Proposed anti-avoidance rules, preference share funding structures The Disaster Management Tax Relief Bills also includes provisions applicable to the administration of customs law. KPMG International entities provide no services to clients. A company, trust, partnership or individual; That is a taxpayer as contemplated in the Tax Administration Act; That is tax compliant as contemplated in the Tax Administration Act; That has gross income of R100 million or less during the year of assessment ending on or after 1 April 2020 but before 1 April 2021; and. South Africa: Proposed changes to de-grouping rules South Africa: Proposed changes to de-grouping rules The 2020 Draft Taxation Laws Amendment Bill (released on 31 July 2020) proposes to allow for a base cost in respect of debt incurred or shares issued as consideration for the acquisition of assets under certain transactions when the section 45 de-grouping provisions are triggered. It was announced in the 2019 Budget Speech that, with effect from 1 March 2020, foreign remuneration in excess of R1 million earned by South African tax residents working abroad would be subject to tax in South Africa.

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