February 25, 2021
South Africa’s Minister of Finance delivers 2021 Budget Review
On 24 February 2021, South Africa’s Minister of Finance, Tito Mboweni, delivered his 2021 Budget Review.
In order to support economic recovery, the South African Government did not introduce measures to increase tax revenue. Tax increases initially proposed in the June 2020 special adjustments budget (which included a proposal to increases tax revenue by R5 billion in 2021/2022) have been withdrawn.
This Alert summarizes the key highlights from the Minister’s Budget Review.
The corporate income tax rate will be lowered to 27% for companies with years of assessment commencing on or after 1 April 2022. This will be done alongside a broadening of the corporate income tax base by:
Tax incentives specifically mentioned in the budget include:
Other notable corporate tax proposals include:
Personal income tax brackets and rebates will be increased by the identified inflation rates, effective from 1 March 2021.
In this coming fiscal year, the South African Revenue Service (SARS) will establish a dedicated unit to improve compliance of individuals with wealth and complex financial arrangements. This first group of taxpayers have been identified and will receive communication during April 2021.
SARS will also focus on consolidating wealth data for taxpayers through third-party information. This will inter alia assist in assessing the feasibility of a wealth tax.
Other notable personal income tax proposals include:
Value-Added Tax (VAT)
The VAT rate remains unchanged at 15%.
Other notable VAT proposals include amendments:
Other indirect taxes
Key indirect tax proposals include:
An additional spending allocation of R3 billion will be provided to SARS to “modernise its technology infrastructure and systems, expand and improve the use of data analytics and artificial intelligence capabilities, and participate meaningfully in global tax compliance initiatives.”
SARS is also expanding its specialized audit and investigative skills in the tax and customs areas to renew its focus on the abuse of transfer pricing, tax base erosion and tax crime.
Key tax administration proposals include:
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