The South African Minister of Finance, Tito Mboweni, presented the annual Budget Speech on 20 February 2019.
The budget is seen as conservative by nature.
Key notes with respect to tax related matters:
- South Africa’s GDP growth forecast for 2019 remains at a low 1.5%.
- Total tax collections for 2018/19 estimated at R1.3 trillion.
- The revenue shortfall for 2018/19 is R42.8 billion.
- Government expect to collect R1.422 trillion in the tax-year February 2020. The new tax measures for the 2019 Budget are designed to provide additional revenue of R15 billion.
- R13.8 billion from personal income tax and R1.2 billion from indirect taxes.
- R1.8 billion revenue from carbon tax and a R1.1 billion in revenue loss on additional items zero-rated increasing the tax-free threshold for personal income taxes from R78 150 to R79 000.
- No changes will be made to personal income tax brackets implying that there will be no adjustment for inflation.
- No inflationary increases to the medical tax credits. The tax credit will be the same for the tax-year ending Feb 2019 and the tax-year ending Feb 2020.
- Increasing the fuel levy by 29c/litre, consisting of a 15c/litre increase in the general fuel levy, a 5c/litre increase in the Road Accident Fund (RAF) levy.
- Carbon tax on fuel of 9c/litre – with effect from 1 June 2019.
- Excise duties on alcohol and tobacco will be increased, as follows:
11.1 The excise duty on a can of beer goes up by 12 cents to R1.74
11.2 A 750ml bottle of wine will have an excise duty of R3.15, which is an addition of 22 cents
11.3 The duty on a 750ml bottle of sparkling wine goes up by 84 cents to R10.16
11.4 The duty on a bottle of whiskey will go up by R4.54 to R65.84
11.5 A pack of 20 cigarettes goes up by R1.14 cents to R16.66
11.6 The excise duty on a typical cigar will go up by about 64 cents to R7.80
11.7 There will be no change to the excise duty on sorghum beer
- Fuel levies will increase by 29 cents per litre for petrol and 30 cents per litre for diesel.
Value-added tax (“VAT”) legislation amendments proposed include:
It is anticipated that on 1 April 2019, a new regulation (repealing and replacing the former regulation) defining the term “electronic services” for purposes of the VAT Act, 1991 will be brought into force.
- Clarification regarding the VAT treatment of the transfer of a long-term reinsurance policy. Amendment of certain definitions in the VAT Act to align with the Insurance Act, 2017.
- In the context of transfers of fixed property, relaxation to the rule that an enterprise or part of an enterprise transferred in terms of the corporate
re-organisationprovisions of sections 42 or 45 of the Income Tax Act must relate to the transfer of a going-concernin order for section 8(25) relief to apply.
- Clarification regarding the treatment of payments for rental stock in instances where a vendor is deemed to supply services to any public authority, and is paid or makes a payment in line with the National Housing Programme.
- Review of the constitutionality of SARS’ discretionary powers in section 72 of the VAT Act.
- Clarification regarding the policy intention behind the relief afforded foreign donor-funded projects, particularly where such project is sub-contracted.
- No adjustments will be made to any of the personal income tax brackets.
- The marginal tax rates for each personal income tax bracket will remain unchanged from the current rates.
- The primary, secondary and tertiary tax rebates will be increased slightly, resulting in small increases in the tax-free thresholds.
- No adjustments will be made to the medical scheme fees tax credits.
- These combined measures are expected to raise a total of R13.8 billion in revenue, out of the R15 billion total tax revenue estimated to be raised by the 2019 tax proposals.
A wealth of information may be obtained from http://www.treasury.gov.za/