Industry updates | March 2024
Please take note of the following industry updates that may be relevant to you and your business.
COMPLIANCE AND ADMINISTRATION
Due dates for reporting and payments- March 2024:
TAX ADMINISTRATION
1. 1. Beneficial ownership – CIPC: Hard-stop functionality for Beneficial Ownership Filing
On 7 February 2024, the Companies and Intellectual Property Commission (CIPC) published notice 5 of 2024, announcing that as of 1 April 2024, the Commission will be introducing a hard-stop functionality that will prevent entities that have not complied with beneficial ownership filing requirements from completing the process of filing their annual returns.
The Commission will also be taking further and necessary enforcement actions with regard to entities which continue to be non-compliant. All entities on the CIPC registry need to have filed their beneficial ownership information by 24 May 2024 as this will be the anniversary date of publication of the amended Companies Regulations, which made the filing of beneficial ownership information mandatory.
2. Fixed percentage tax directives for the 2025 year of assessment
1 March 2024 will be the beginning of the 2025 year of assessment and many commission earners, freelancers and personal service companies will need to finalise their fixed percentage tax directives.
The fixed percentage directive is issued to commission earners and personal service companies and trusts, instructing tax to be deducted at a predetermined set rate each month, irrespective of amount earned.
A set fixed percentage will help to ‘normalise’ tax payments across the full tax period and may alleviate a hefty tax liability at the end of a tax year. Important to note regarding the fixed percentage tax directive:
A tax directive is valid only for the tax year or period stated therein.
Employers may under no circumstances deviate from the instructions of the directive.
Employers must apply the percentage of employees’ tax as indicated in the directive prior to taking into account allowable deductions for employees’ tax purposes (e.g. pension, retirement annuity fund contributions, etc.). Where the employer received a directive and the employee’s commission income is not more than 50% of the gross remuneration income, the employer can ignore the directive instruction.
3. Highlights from the 2024 Budget Speech
The Budget Speech took place on 21 February 2024 before a sitting of the National Assembly at the Cape Town City Hall.
The Budget Speech presented an overall synopsis of the state of the country’s finances, amendments to tax, spending plans for the upcoming fiscal year, distribution of revenue across spheres of government, and distribution of expenditure across national departments. Below are the tax-related highlights of the Budget Speech:
Personal Income tax brackets, rebates, and medical tax credits Personal income tax brackets, rebates and medical credits remain unchanged for the year 2024/25.
Alcohol products and excise duties on alcoholic beverages and tobacco related products There is an increase of between 6.7 and 7.2 per cent for alcohol products excise duties for 2024/25. There is an increase tobacco excise duties by 4.7% for cigarettes and cigarette tobacco, and by 8.2% for pipe tobacco and cigars. There is an increase of the excise duty on electronic nicotine and non-nicotine delivery systems to R3.04 per millilitre.
Carbon Tax As of 1 January 2024, carbon tax increased from R159 to R190 per tonne of carbon dioxide equivalent. The carbon fuel levy will increase to 11 cents per litre for petrol and 4 cents per litre for diesel effective from 3 April 2024. The Climate Change Bill remains under consideration in Parliament.
Fuel Levy There will be no increases to the general fuel levy or the Road Accident Fund Levy for 2024/25.
Two-pot retirement reform from 1 September 2024, the first cash withdrawals can be made from the savings pot.
Global minimum corporate Tax Multinational corporations with annual revenue exceeding 750 million euros will be subject to an effective tax rate of at least 15%, regardless of where their profits are generated.
Incentivising local electric vehicle production Producers of electric vehicles in South Africa will be able to claim 150 percent of qualifying investment spending as an incentive to aid the transition to new energy vehicles.
Learnership Tax Incentive Extension The sunset date for section 12H learnership tax incentive will be extended by 3 years to 31 March 2027.
Plastic bag levy and incandescent globe taxes There is an increase in the plastic bag levy from 28c/bag to 32/bag from 1 April 2024.
Motor vehicle emissions tax There is an increase in motor vehicle emissions tax rate for passenger vehicles from R132 to R146 per gram of CO2 emissions per kilometre and the tax rate for double cabs from R176 to R195 per gram of CO2 emissions per kilometre from 1 April 2024.
4. SARS’ debt collection drive starts early in fear of revenue collection deficit
31 March 2024 will see the end of SARS’ 2023/24 financial year.
During his budget speech on 21 February 2024, Finance Minister, Mr Enoch Godongwana, attributed the deterioration of tax revenue collection for the 2023/24 financial year to the country’s weak economic performance.
As it stands, the tax revenue collection stands at R1.73 trillion, R56.1 billion lower than the amount estimated in the 2023 budget. SARS has expanded the tax register, improved debt collections, and successfully reduced fraudulent refunds. Notwithstanding, over the next month, it is anticipated that SARS will be undertaking more aggressive tax collection strategies to maximise revenue collection and ensure that the 2023/24 revenue targets are met.
Amongst others, some of the collection steps that SARS may utilise are:
Issuing notices for final demand;
Issuing third-party appointments;
Issuing a judgement and having a taxpayer blacklisted with the credit bureau;
Attaching and selling assets through a writ of execution; and/or
Obtaining a preservation order in respect of a taxpayer’s assets.
A taxpayer that is not able to settle a tax debt in full by the payment date, may mitigate against these steps available to SARS by utilising the following steps:
Request for the suspension of payment if the debt is under dispute;
Request a deferral payment arrangement to pay the debt in installments; and/or
Request a debt compromise if the criteria is met.
- Domonique Ramos | 05 March 2024