National Treasury and the South African Revenue Service (SARS) published the 2020 Draft Taxation Laws Amendment Bill (Draft TLAB), and the 2020 Draft Tax Administration Laws Amendment Bill (Draft TALAB) for public comment at the end of July. While the two bills address a number of issues – including changes to carbon taxes and export taxes – commenters have drawn specific attention to one of the proposed amendments in the Draft TALAB that could have serious consequences for taxpayers.
Louise Kotze, associate designate at law firm Cliffe Dekker Hofmeyr, said that the issue revolves around the removal of the element of wilful conduct in respect of tax-related offences. There are various provisions in the tax Acts which provide that specified types of conduct by a taxpayer will constitute an offence, in respect of which the taxpayer may be liable for a fine or imprisonment. These include:
- Paragraph 30 of the Fourth Schedule to the Income Tax Act 58 of 1962;
- Section 58 of the Value Added Tax Act 89 of 1991; and
- Section 234 of the Tax Administration Act 28 of 2011 (TAA).
“The Draft TALAB proposes to amend the wording of these three provisions by removing the term ‘wilfully‘ from the legislation, thereby removing the obligation on SARS to prove intent before a taxpayer can be found guilty of one of these offences,” said Kotze.
The draft memorandum that was published with the Draft TALAB explained that the reason for the proposed amendment is that the term “wilfully” denotes only intention on the part of the taxpayer and does not encapsulate the other type of fault, being negligence.
“From the explanation provided in the draft memorandum, it appears that the intention of National Treasury and SARS is not to relieve SARS of its obligation to prove fault on the part of the taxpayer, but rather to specify that the element of fault includes both intent and negligence,” .
August 4, 2020
The 2020 Draft Taxation Laws Amendment Bill (2020 draft TLAB) and the 2020 Draft Tax Administration Laws Amendment Bill (2020 Draft TALAB) have been published for comment. According to a national treasury statement, the Draft Tax Bills contain tax proposals made in the 2020 Budget on 26 February 2020.
Key tax proposals contained in the 2020 Draft TLAB include the following:
• Proposed introduction of export taxes on scrap metals;
• Tax measures required as a result of the modernisation of the foreign exchange control system;
• Aligning the carbon fuel levy adjustment with the Carbon Tax Act;
• Allowing a carbon tax “pass through” for the regulated liquid fuels sector;
• Addressing an anomaly in the tax exemption of employer provided bursaries;
• Clarifying rollover relief for unbundling transactions; and
• Consequential amendments as a result of 2019 changes to section 72 of the VAT Act.
The statement contains the proposed export tax rates for scrap metals as recommended by the International Trade Administration Commission.
Key tax proposals contained in the 2020 Draft TALAB include the following:
• Amendments enabling the proposed introduction of an export tax on scrap metals;
• Removal of the requirement to prove intent with regard to certain offences listed in the Fourth Schedule to the Income Tax Act, the Value-Added Tax Act and the Tax Administration Act;
• Refusal to authorise a refund where returns are outstanding under the Skills Development Levies Act and the Unemployment Insurance Contributions Act;
• Withholding of a refund pending a criminal investigation; and
• Estimated assessments where relevant material requested by SARS has not been supplied;
The 2020 Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill (2020 draft Rates Bill) has also been published for comment.
Key tax proposals contained in the 2020 Draft Rates Bill include the following:
• Changes in rates and monetary thresholds to the personal income tax tables;
• Adjustment of transfer duty rates to support the property market; and
• Increases of the excise duties on alcohol and tobacco.
Treasury clarified that the 2020 Draft Rates Bill was first published on Budget Day on 26 February 2020 but is “published for the second time in order to solicit any public comments on the tax proposals contained therein”.
Draft Regulations Prescribing Electronic Services are also published for comment. Key tax proposals contained in the Draft Regulations include amendments to the definition of “telecommunication services”.
Venture Capital Companies (VCC) registered with the South African Revenue Service (SARS) as at 1 March 2020 are also requested to submit information prescribed in a survey.
“The information will be considered in determining the extent to which the VCC tax incentive contributes towards Government’s policy objectives of facilitating funding for small businesses that cannot obtain financing from financial institutions, economic growth and job creation.”
Comment on the 2020 Draft Tax Bills, Draft Regulations and VCC survey is invited until 31 August 2020.
Meanwhile, treasury announced that it will make a request to the standing committee on finance for the extension of COVID-19 tax relief measures including streamlined special tax dispensation for funds established to assist with COVID-19 disaster relief efforts; deferral of the payment of employees tax liability for tax compliant small to medium sized businesses and a 90 day deferral for the payment of excise taxes on alcohol and tobacco.
All comments received on drafts are considered in full, but due to time constraints, no individual correspondence will be entered into. The draft documents are categorised according to their due date for comment. Comments may be emailed to the address indicated in the last column.