BUSINESS LAW & TAX What this year may hold for taxpayers

Pieter Janse van Rensburg Director, AJM

So 2023 isin full swing and pundits in various industries are predicting how thenew calendar year will play out.

Tax is noexception, especially withthe 2023national budgetto bedeliveredby finance ministerEnoch Godongwana onWednesday, February 22.

Let’s take a moment to gaze into the tax crystal ball for the year ahead.

NATIONAL BUDGET

Thefocus in2023is likelyto bemore onbalancingthe books ratherthan legislative and technicaltax amendments.Whiletherehavebeen some windfallsfor the Treasury recently,including additional revenue from increased commodity prices, the expenditure side of the budget, particularly interest spending andthe national wage bill, will remain under pressure.

Wemay seeadditional sources of income from:

● Limited bracketcreep adjustments;

● Higher sin taxes,which, by the way, also appear to be made beunder theguise of social issues;

● A phasingout of allowances (suchas learnership allowances, industrial development zone allowances andenergy efficiency allowances). They appearonly todistractfrom larger issues,and uptakein the markethas notalways been at expected levels; and ● Controversially, could we seea specialenergylevy introduced tosupport Eskom?

Informal supportis also growing for introducing a wealthtax inthecountry. While many tax practitioners are doubtfulof itsimplementation,bothfromapolicyperspective and practical implementation,itwouldnotbethe first time political interference has driven tax policy.

COMPLIANCE

Sars has done extremely well in enforcing tax compliance recently,and thehope isthat it continuesto do so. The appointment of several skilled staff membersand the deployment of artificial intel-

Regulation Required

ligence on itsplatforms has assisted thistremendously, and we hope to see this trend continue.

A Shift In Focus

While compliance is important,a shiftin Sars’s focus fromlow-yieldingdisputesto matters of more substance is expected. Surely, deploying (limited) resources to complex cross-border transactions is worth significantly more than attacking Joe Soap’s small home office deduction. This focus on complex cross-bordermatters is particularly on the backofaminimumglobaltax rateof15% beingpuntedby many European countries.

OMBUD

Prof Thabo Legwaila,theacting tax ombud, is doing a sterlingjob inoffice. Wehope

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to see his permanent appointment to the role confirmed.

THE

LION, THE WITCH AND THE CRYPTO ASSET

There needs tobe, and we expect, more interaction and guidance between Sars and the SAReserve Bankon regulatingcryptoassets,particularly in the arbitrage trading field. Taxpayers are currently caughtin themiddle ofinaction between these organisations, and this position needs to be revised.

LOOP DE LOOP

The Reserve Bank has backpedalled on its approval of (now allowed)loop structures (investment intoSA by SA exchange control residents,but throughanoffshore structure). We expectthat thiswill be addressed sooner rather than later since legitimate transactions are beingheld up by administrative bureaucracy and lack ofclear policy, which cannot stand.

LET’S REWARD SUCCESS

Rassie and Jacquesteam up againcomeRugbyWorldCup time in September. Suppose Siyalifts theWebb-Ellistrophy again as he did back in 2019. Should the three of themnot berewardedwith the positions offinance minister, director-general in the National Treasury and Sars commissioner?

A clear track record of success on aglobal scale, with theoverwhelming supportof, Idare say,all South Africans, is more than we have now (tongue in cheek, of course).