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28 February 2018

South Africa's 2018 Budget impacts tax administration

In South Africa's 2018 Budget Speech held on 21 February 2018, the former Minister of Finance, Malusi Gigaba, announced that the Government will respond to the Davis Tax Commission's report on tax administration and introduce draft legislation to implement some of its recommendations, including those on the accountability of the South African Revenue Service (SAR) to the Minister of Finance, and the establishment of a supervisory board, as well as measures to strengthen the Office of the Ombud.

In addition to the above, various changes to Tax Administration will be introduced with the 2018 Taxation amendments, some of which are noted below:

  • SARS will release a discussion paper on the potential use of electronic fiscal devices such as cash registers, to help revenue administration by monitoring business transactions.
  • The audit provisions will be amended to include a notification at the commencement of an audit process to keep all parties informed.
  • Non-compliance provisions in respect of tax practitioners will be amended to include deregistration as a consequence for repetitive non-compliance.
  • Adjustment to the official rate of interest to a level closer to the prime rate of interest.
  • There will no longer be a requirement for persons paying exempt dividends to submit returns in order to ease the administrative burden.
  • Correction of tax invoices to rectify incorrect information will no longer be considered an offence.
  • Special returns for Value Added Tax (VAT) will not be required to be submitted only retained by the vendor.
  • The income tax and VAT legislation to be amended to address administrative difficulties associated with the supply of cryptocurrencies.
  • The provisions relating to the Research and Development incentive will be looked into to resolve legislative complexities and there will be a shift from manual to online applications.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Advisory Services (Pty) Ltd., Tax Controversy, Johannesburg

Ernst & Young Advisory Services (Pty) Ltd., Africa ITS Leader, Johannesburg

  • Marius Leivestad
    marius.leivestad@za.ey.com

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

  • Rendani Neluvhalani
    rendani.mabel.neluvhalani@uk.ey.com
  • Byron Thomas
    bthomas4@uk.ey.com

Ernst & Young LLP, Pan African Tax Desk, New York

  • Silke Mattern
    silke.mattern@ey.com
  • Dele A. Olaogun
    dele.olaogun@ey.com
  • Jacob Shipalane
    jacob.shipalane1@ey.com

Ernst & Young LLP, Pan African Tax Desk, Houston

  • Elvis Ngwa
    elvis.ngwa@ey.com

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ATTACHMENT

PDF version of this Tax Alert

Document ID: 2018-5352

 
 

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