Press Release from the Tax team
On the 22nd of February, Shepstone & Wylie Attorneys, in partnership with the South Africa Institute of Tax Professionals (SAIT), hosted a corporate insights breakfast at FNB Acacia House in Umhlanga Ridge. Being held on the morning after the Budget Speech, the objective of the breakfast was to provide companies with insight into what to expect both politically and financially in the coming year.
The keynote speaker at the event was Lawson Naidoo, co-founder of the Paternoster Group, an independent consultancy providing corporate and other clients with political economy analysis as well as strategic advisory services. A Cambridge graduate, Naidoo has over 30 years’ experience in the political, parliamentary, business and civil society sectors. Naidoo worked at the ANC office in the UK from 1987 to 1992 as Special Advisor to the Speaker of Parliament. Naidoo is currently Executive Secretary of the Council for the Advancement of the South African Constitution (CASAC).
Naidoo’s eloquent presentation covered the inner workings of the ANC conference held at NASREC last year, the recent shift in power from Jacob Zuma to Cyril Ramaphosa, predictions of the upcoming cabinet reshuffle and the short-term, medium term and long term challenges that President Ramaphosa will face.
Naidoo said that “Ramaphosa’s to-do list is a long and varied one and he will have to prioritise carefully; clearly providing policy certainty and macro-economic stability whilst retaining social expenditure. Avoiding a further ratings downgrade is crucial and hopefully the Budget has achieved that even if it did not satisfy all constituencies.”
Naidoo also cautioned that “although Ramaphosa has generated new belief that things will be better under his Presidency, we must not expect too much too soon – his is a long term project to rescue us from years of corruption and mismanagement under Jacob Zuma.”
Naidoo then handed the floor over to Anton Lockem and Andrew Staude, both Partners in the tax team at Shepstone & Wylie, to cover the tax implication of Wednesday’s Budget Speech. These included predictions of the tax legislative changes that can be expected in the next 18 months, as well as:
• VAT increases from 14% to 15% on 1 April 2018;
• Estate duty rate increases from 20% to 25% on dutiable amount of estates of more than R30 million;
• Limited relief for the effect of inflation in adjusting personal income tax rates, resulting in additional tax of R6.8 billion;
• Donations tax rate increases from 20% to 25% on donation of more than R30 million;
• Minister of Finance to approve 6 special economic zones for tax relief;
• Increases excise duties on tobacco and alcohol;
• General fuel levy increases by 22 cents per litre and Road Accident Fund levy increases by 30 cents per litre on 4 April 2018;
• Increases environmental taxes on plastic bags, incandescent light bulbs and vehicle emissions tax, and the new health promotion levy on sugary beverages (levied at 2.1 cents per gram exceeding 4 grams per 100ml) are effective from 1 April 2018;
• The Income Tax and VAT legislation will be amended to clarify the tax treatment of cryptocurrency transactions;
• Treasury is considering increasing the official interest rate so as to be more closely aligned with the prime lending rate;
• Medical tax credit increases are below inflation to assist in funding the National Health Insurance Programme; and
• The proposal to reclassify distributions from foreign trusts to resident beneficiaries to be taxed as income will be revisited in the current financial year.
The 150 strong turn-out speaks to the fact that corporate South Africa is eager to capitalise on South Africa’s new found political and economic optimism.
For more information on the above contact:
Anton Lockem, Head of Tax
+27 31 575 7413