February 27 2023

Budget 2023-24: South Africa Announces Various Tax Proposals Aimed at Raising Revenue and Increasing Compliance

Source: IBFD Tax Research Platform News

South Africa has announced the tax proposals to form part of the budget review process as set out in the Budget 2023-24. These include the strengthening of the anti-tax avoidance rules, revenue raising and other tax proposals aimed at providing tax relief as follows:

  • strengthening anti-tax avoidance rules dealing with third-party backed shares and rules relating to the definition of contributed tax capital and converting contributed tax capital from foreign currency to rands;
  • clarifying anti-tax avoidance rules for low–interest or interest-free loans to trusts;
  • apportioning the tax-free investment contribution limitation and limiting the retirement funds contributions deduction when an individual ceases to be a tax resident;
  • refining the rules applicable to unbundling transactions;
  • clarifying the interest limitation rules;
  • clarifying the treatment of exchange gains and loses;
  • refining the provisions dealing with the impact of International Financial Reporting Standard 17 insurance contracts on taxation of insurers;
  • reviewing the Sharia-compliant financing arrangements;
  • introducing ZAR 4 billion relief for individuals that install solar panels, and ZAR 5 billion to companies through the expansion of the renewable energy tax incentive;
  • clarifying the interaction of the provisions on the acquisition of assets in exchange for shares;
  • increasing excise duties on alcohol and tobacco in line with expected inflation of 4.9%;
  • reviewing the value added tax (VAT) treatment of specific supplies in the short-term insurance industry;
  • clarifying the VAT treatment of the prepaid vouchers in the telecommunications industry;
  • extending the utilization period in the Carbon Offsets Regulations;
  • aligning tax registration requirements for non-resident employers; and
  • aligning with anti-money laundering and combating the financing of terrorism developments.

The Minister of Finance unveiled the 2023-24 National Budget on 22 February 2023.