Industry updates | November 2022
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- November 2022:
TAX ADMINISTRATION
1. Smart Borders- NEW TRAVELLER DECLARATION
SARS will launch a pilot implementation of an electronic on-line portal for travellers at the King Shaka International Airport during November 2022.
SARS will tweak the system during the pilot phase and will commence the roll out of the online declaration system across all other South African ports of entry in April 2023. The pilot programme will allow travellers to make declarations (regarding goods purchased, received, or otherwise acquired) on a voluntary basis via an on-line portal on their mobile devices, ahead of their arrival or departure to/from South Africa.
A traveller that does not make use of the on-line facility, would still have to declare the information in paper form or electronically at self-service counters at the terminals or with a Customs Officer on a held device. The declaration is therefore mandatory, since travellers are by law required to make certain declarations of goods and cash on entering or leaving South Africa in terms of the Customs and Excise Act, No. 91 of 1964.
2. Medium-Term Budget Policy Statement delivered
The Minister of Finance, Mr Enoch Godongwana, tabled the Medium-Term Budget Policy Statement in Parliament on Wednesday, 26 October 2022.
The Minister made various statements on tax policy and strategy that clients may find valuable, specifically:
• Climate change: In line with South Africa’s global commitments, fiscal policy will continue playing its part to shift economic incentives towards cleaner forms of energy. As announced in the 2022 Budget, the carbon tax rates will be increased significantly from 2023 onwards. Support for climate change mitigation and adaptation measures will increasingly feature in the budget policy period ahead.
• Division of Revenue: National Treasury is reviewing the conditional grants system to determine if it is structured in a way that supports efficient service delivery, rollout of infrastructure, building of capacity and provision of operational support. The findings will be used to reform the grant system for greater impact.
• Emergency measures under way to address costs of electricity crisis: Emergency measures announced by the President in July 2022, prioritise improving the performance of existing power stations and adding new generation capacity to the grid as quickly as possible. Successfully enacted, efforts spearheaded by the National Energy Crisis Committee could add about 14 gigawatts of electricity capacity over the next two years.
They include (amongst others):
Facilitating investments in rooftop solar by developing a feed-in tariff for small-scale embedded generation projects; and investigating the expansion of tax incentives for commercial installations.
• General public services: The South African Revenue Service will receive additional funds to improve information and communications technology capacity and revenue collection capabilities, and to report on tax administration digital resilience during the COVID-19 pandemic.
• Peace and security: Funding will also be allocated to the National Prosecuting Authority to increase capacity in specialised tax units and the Investigating Directorate, procure specialist prosecution services for complex matters (especially financial crimes), appoint forensic auditors and accountants to deal with high-priority asset forfeiture matters, establish a digital forensic data centre, and finance increased witness protection operational costs. Additional funding will enable the Financial Intelligence Centre to increase its human resource capacity and help the Special Investigating Unit initiate civil litigation following the State Capture Commission recommendations.
• Road Accident Fund: The Road Accident Fund remains a significant contingent liability despite receiving a growing share of fuel tax revenues. It is estimated that the accumulated deficit will grow by an annual average rate of 7.5 per cent, from R385.5 billion in 2021/22 to R479 billion in 2024/25. A change in disbursement strategy could accommodate a larger share of claims if loss of income support is paid as annuities instead of as lump sum payments. This change in strategy could lead to improved cash flow management, which in turn will help manage short- and long-term liabilities.
• Social development: The function receives the second-largest share of the consolidated budget over the MTEF period. On 1 October 2022, the old age grant, war veterans grant, disability grant and care dependency grant increased by an additional R10 per month from R1 980 (R2 000 for over 75-year-olds and war veterans) to R1 990 (R2 010 for over 75-year-olds and war veterans). At present, 7.4 million people receive the COVID-19 social relief of distress grant.
To give government additional time to consider options for working-age people that can replace, complement or adjust the grant, it has been extended for one year until March 2024. Given the large cost of extending this grant, increases to other social grants in 2023/24 will be slightly below inflation and other social welfare priorities may remain unaddressed.
• Southern African Customs Union revenue pool: Payments to the Southern African Customs Union (SACU) for 2021/22 and 2022/23 remain unchanged from the 2022 Budget estimates. The SACU revenue-sharing formula adjusts for forecast errors with a two year lag. As a result, the projected 2023/24 SACU payments include the forecast error adjustment for 2021/22 based on the outcomes of the common revenue pool estimates. Compared with the 2022 Budget, SACU payments projections have been revised higher by R13.2 billion in 2023/24 and R19.4 billion in 2024/25. The revisions to SACU payments are mainly due to higher common revenue pool estimates than projected in the 2022 Budget Review.
• Fiscal framework assumptions for long-term main budget baseline: The long-term main budget fiscal framework assumptions that underpin the long-term debt outlook include the following:
- No new revenue measures from 2023/24 onwards.
- The gap between gross tax and main budget revenue averages 0.48 per cent of GDP per year from 2026/27 onwards.
- In real terms, non-interest expenditure (excluding the Infrastructure Fund and Eskom financial support) grows by 1.5 per cent per year from 2026/27 onwards.
- The Infrastructure Fund amounts are R8 billion in 2023/24, R12.6 billion in 2024/25, R10.8 billion in 2025/26, R17 billion in 2026/27, R24 billion in 2027/28 and R24.5 billion in 2028/29. Over a decade from 2019/20, the Infrastructure Fund remains at R100 billion, as announced in the 2019 Medium Term Budget Policy Statement. Underspending of R4.2 billion on the Infrastructure Fund allocations in 2022/23 is added back in 2026/27 (R2 billion) and 2027/28 (R2.2 billion).
- Financial support for Eskom amounts to R224.6 billion from 2019/20 until 2025/26.
- Beyond the medium term, real GDP growth averages 2.1 per cent.
3. SARS committed to achieving higher revenue estimate
SARS issued a Media Release committing itself to achieving the higher revenue collection estimate (R1 682 billion up from R1 598 billion). SARS provides about 90% percent of all government revenue, which makes this increase in the revenue to be collected by SARS very significant.
- Domonique Ramos | 09 November 2022