SAIT Comments on the Draft TLAB and TALAB 2014 Presenters: Mr Job Kabochi Mr Lesedi Seforo Mr Erich Bell

Introduction  Largest tax association in SA – more than members ‘specialising’ in taxation.  Comprehensive written submission developed by SAIT technical department, our members and 5 specialist committees.  Submission ScoF focused on technical matters.  Policy and other considerations require further review in relation to impact on economy, social challenges and National Development Plan.

Termination of Agricultural Zero-rate  Revenue collection vs. cash-flow impact for small farmers  Our views  Proposal be deleted in favor of stronger enforcement  Retain ZAR 1.5m threshold test for qualifying farmers  ‘Category D’ registration be amended allow earlier VAT refunds

Import VAT Timing  Proof of payment = customs receipt; clarity welcome  Our concerns  Delayed input tax credits = adverse cash-flow  Financial vs VAT accounting disparity  In our view risk to fiscus mitigated by:  SARS’s clearing agent vetting process  Agents’ guarantees paid to SARS  VAT credits be allowed if payment made by return filing date

Electronic Services Enterprise  Multiple-proxy test welcome  Clarity required: Origination of payment from South African bank Invoice delivery address - physical vs electronic address Future consideration - B2C vs B2B

Relevant Material Current definition Any information, document or thing that is foreseeably relevant for the administration of a tax Act… What is the administration of a tax Act?  It basically means anything that may affect the amount of tax that a person owes SARS Proposed definition Any information, document or thing that in the opinion of SARS is foreseeably relevant for the administration of a tax Act… Why the change?

Change to the definition Concerns  It has been left to SARS’ discretion to determine what is relevant  No obligation on SARS to explain how the material is relevant.  No mechanisms available for the taxpayer to object.

Small business corporations  Current incentives  Accelerated write offs (manufacturing assets in full in YOA brought into use whilst for non-manufacturing assets election between a 50/30/20 or section 11(e) allowance.  Taxed according to a sliding scale: Taxable incomeRate of tax Not exceeding R per cent of taxable income Exceeding R but not exceeding R per cent of taxable income that exceeds R Exceeding R but not exceeding R R plus 21 per cent of amount by which taxable income exceeds R Exceeding R R plus 28 per cent of amount by which taxable income exceeds R

Small business corporations (continued)  Proposed changes  Small business corporations to be taxed in the same manner as all other companies (28 per cent tax rate from the first Rand).  If tax compliant in terms of tax returns and liabilities, the small business corporation would receive a refundable compliance rebate of R per YOA.  Nothing mentioned in TLAB 2014 about the accelerated write off clauses.  Concerns regarding proposed changes  Internal compliance costs for a small business entity is over R per year of assessment.  The only small business corporations that stand to benefit is small business corporations with a taxable income of below R (a SBC with a taxable income of R stands to loose R in taxes should the proposal be implemented).

Small business corporations (continued)  Conclusion  It is proposed that incentive be provided according to a sliding scale starting at R and moving up to the range of R for your larger small business corporations.  Currently incentive is aimed at incentivising micro type of enterprises at the cost of flourishing small businesses.

Thank You