Port Elizabeth - What can business owners expect when Finance Minister Pravin Gordhan delivers his budget address on 26 February? Multinational professional services firm PricewaterhouseCoopers has come up with a list of possibilities.
Corporate tax rates
There should be no change to the corporate tax rate of 28%, even though corporate tax revenues are expected to be under pressure in 2014/15 because of lower growth expectations. For one, any increase would negatively impact on the competitiveness of SA’s tax rates.
Small business
In December, the Davis Committee (established to review SA’s tax legislation) provided the finance minister with its first report on small and medium businesses. From the start of the tax review, the committee has indicated that this sector is of special importance, and hopefully we can expect some changes to stimulate growth in the coming year.
Mining taxes
No significant announcements are expected on changes to the mining tax regime. The Davis Committee is to undertake a review of mining tax during 2014 and an announcement to this effect can be expected in the budget.
Deductions of expenses paid to exempt recipients
The 2013 draft taxation laws amendment bill included a proposal to defer the deduction of expenditure payable to a related party who is exempt from South African tax on the amount until such time as the amount was actually paid. This proposal was withdrawn for further consultation. It is expected that it may be placed back on the table in the 2014 budget.
Long-term insurers
In the 2013 budget, an announcement was made regarding the reform of the income tax regime for long-term insurers. In particular, it was announced that risk business would no longer be taxed in the policyholder funds but rather in the corporate fund. No legislation was tabled during 2013 and it is expected that this reform will be rolled forward in the 2014 budget.
Financial instruments and derivatives
The taxation of financial instruments and derivatives is of concern to government, and there may be announcements on further reforms in this regard.
Corporate tax rates
There should be no change to the corporate tax rate of 28%, even though corporate tax revenues are expected to be under pressure in 2014/15 because of lower growth expectations. For one, any increase would negatively impact on the competitiveness of SA’s tax rates.
Small business
In December, the Davis Committee (established to review SA’s tax legislation) provided the finance minister with its first report on small and medium businesses. From the start of the tax review, the committee has indicated that this sector is of special importance, and hopefully we can expect some changes to stimulate growth in the coming year.
Mining taxes
No significant announcements are expected on changes to the mining tax regime. The Davis Committee is to undertake a review of mining tax during 2014 and an announcement to this effect can be expected in the budget.
Deductions of expenses paid to exempt recipients
The 2013 draft taxation laws amendment bill included a proposal to defer the deduction of expenditure payable to a related party who is exempt from South African tax on the amount until such time as the amount was actually paid. This proposal was withdrawn for further consultation. It is expected that it may be placed back on the table in the 2014 budget.
Long-term insurers
In the 2013 budget, an announcement was made regarding the reform of the income tax regime for long-term insurers. In particular, it was announced that risk business would no longer be taxed in the policyholder funds but rather in the corporate fund. No legislation was tabled during 2013 and it is expected that this reform will be rolled forward in the 2014 budget.
Financial instruments and derivatives
The taxation of financial instruments and derivatives is of concern to government, and there may be announcements on further reforms in this regard.