A Green Economy In South Africa
The South African Department of Forestry, Fisheries and the Environment has defined the green economy in South Africa as “a system of economic activities related to the production, distribution and consumption of goods and services that result in improved human well-being over the long term, while not exposing future generations to significant environmental risks or ecological scarcities. It implies the decoupling of resource use and environmental impacts from economic growth. It is characterized by substantially increased investment in green sectors, supported by enabling policy reforms. The Green Economy refers to two inter-linked developmental outcomes for the South African economy:
- Growing economic activity (which leads to investment, jobs and competitiveness) in the green industry sector
- A shift in the economy as a whole towards cleaner industries and sectors
Green Economy Principles
The most common green economy principles (identified from a review of eight published sets of principles or characteristics) are:
- The green economy is a means for achieving sustainable development
- The green economy should create decent work and green jobs
- The green economy is resource and energy efficient
- The green economy respects planetary boundaries or ecological limits or scarcity
- The green economy uses integrated decision making. The green economy measures progress beyond GDP using appropriate indicators/metrics. The green economy is equitable, fair and just – between and within countries and between generations. The green economy protects biodiversity and ecosystems. The green economy delivers poverty reduction, well‐being, livelihoods, social protection and access to essential services. The green economy improves governance and the rule of law. It is inclusive, democratic, participatory, accountable, transparent, and stable. The green economy internalises externalities
Implementation
The implementation of a green economy in South Africa includes private sector, civil society and all levels of government. The nine key focus areas are identified in the green economy programmes that include:
- Green buildings and the built environment
- Sustainable transport and infrastructure
- Clean energy and energy efficiency
- Resource conservation and management
- Sustainable waste management practices
- Agriculture, food production and forestry
- Water management
- Sustainable consumption and production
The South African Green Economy Accord identifies viable changes in the structure andcharacter of the production economy that can generate a more inclusive and greener economy, and set targets based on the opportunities for jobs in the green economy. There are also a range of other policies (Acts, strategies, plans and white papers) that address specific sectors and will serve to enable the transition to a green economy in South Africa.
In addition to national and international policy making, the private sector can contribute to steering the country towards a green economy, for example, by investment in green innovation – such as the introduction of a new or significantly improved product, process or method that results in a reduction of environmental impact, and/or optimises the use of resources throughout the lifecycle.
The Mandatory Compliance Checklist
The Companies and Intellectual Property Commission (hereinafter referred to as “the Commission”) is tasked with ensuring, monitoring and enforcing compliance with the Act.
In pursuance of this function, the Commission requires that a mandatory Compliance Checklist be completed and submitted by all categories of companies whose annual financial statements are audited or independently reviewed. This requirement does not apply to a Close Corporation. The checklist is required to be submitted within 30 business days after the anniversary of the company’s date of incorporation. The period for which the company declares its compliance is to be known as its “Compliance Year”, and is aligned to the anniversary date of its incorporation.
The Checklist requires that the company declare its compliance status to certain Sections, Regulations and Schedule 1 of the Act, as follows:
- Section 4: Solvency and Liquidity
- Section 15: Memorandum of Incorporation (MOI), shareholder agreements and rules
- Section 26: Access to company records
- Section 27: Financial year of company
- Section 28: Accounting records
- Section 29: Financial Statements
- Section 30: Annual Financial Statements
- Section 32: Use of company name and registration number
- Section 33: Annual Return
- Section 44: Financial assistance for subscription of securities
- Section 45: Loans or other financial assistance to directors
- Section 50: Securities Register and numbering
- Section 61: Shareholders meeting
- Section 66: Board, directors and prescribed officers
- Section 69: Ineligibility and disqualification of directors/prescribed officers
- Section 70: Vacancies on board
- Section 72: Board committees
- Section 86: Mandatory appointment of company secretary
- Section 90: Appointment of auditor
- Section 92: Rotation of auditor
- Section 94: Audit committees
- Regulation 21: Registered office of the company
- Regulation 43: Social and Ethics Committee
- Schedule 1: Provisions concerning Non-Profit companies
It is ultimately the responsibility of the directors to ensure compliance and completion of the Checklist. Any person who completes it incorrectly or fraudulently can be held responsible, as follows:
- Section 215(2)(e): a person commits an offence who knowingly provides false information to the Commission
- Section 216((b): any person convicted of an offence is liable to a fine or to imprisonment for a period not exceeding 12 months, or to both a fine and imprisonment
Should you require professional advice in this regard, please do not hesitate to contact our offices.
E-Commerce at a Glance
Within our new normal, e-commerce for many has become a great solution to navigate through the uncertainty brought upon us by the Covid-19 pandemic. Allowing businesses to continue trading while still observing strict social distancing measures, e-commerce helps to broaden the reach of businesses and grow their client base into areas that would otherwise be unreachable.
With the addition of platforms such as Shopify or Wix, e-commerce has never been more accessible. Yet, even with the ease granted by these e-commerce platforms, some businesses still struggle to successfully implement their business into the digital realm.
Generally speaking, the 2 most comment types of e-commerce platforms are: Software-as-a-Service (Saas) platforms and Platform-as-a-Service (Paas) platforms. SaaS platforms involves only the use of software, an example here being Shopify, whereas PaaS platforms offer both hardware and software over the internet, an example being Amazon Web Services (AWS). Using e-commerce platforms offers a host of different benefits such as:
- Ease of customization
- Scalability
- Professional support
- Quicker setup turnaround times
- Operational cost reductions
With the current big e-commerce platforms, smaller businesses no longer need to hire whole IT teams to develop and setup e-commerce stores as long as there are a few computer savvy employees within the business who are willing to invest time into learning the platform and working with the provider’s support team.
With this being said, it is however important for you to choose the correct platform for your business. As each business is unique with its different processes and offerings, not all out-of-the-box platforms will be able to support the wide range of different businesses. Choosing the incorrect platform for your business will lead to unsuccessful implementation and a lot of wasted time. To help in successfully choosing the correct platform, your business should:
- Carefully document each of its core business processes which must be communicated to the platform provider to ensure that they can support your fundamental needs
- Find platforms that offer integration to some of the current software you are using such as your accounting software
- See if some of its processes can be changed to better suit the platform
- Assess if the costs are within budget
More often than not, e-commerce platforms may not offer the perfect solution to your business out-of-the-box and will require workarounds or additional custom solutions to be developed. Fortunately, most platform providers would be able assist in developing a custom solution for you, usually at an additional fee, to ensure your business requirements are properly met.
All businesses should critically assess the use of e-commerce for their business as it can unlock numerous opportunities when implemented successfully. Technology is dynamic by nature and by assessing and realizing these opportunities as they rise, businesses will be able to survive and thrive in these times of uncertainty.
Tax Directives Enhancements
Enhancements have been implemented to the Tax Directives system.
In cases where a pensioner has one source of income during a tax year, our PAYE system typically ensures that the tax due at year-end is sufficiently covered by way of monthly PAYE withholdings.
However, where a pensioner is in receipt of more than one source of income, a tax debt may arise at year-end when we combine all the sources of income together for purposes of determining taxable income and tax due.
While the PAYE system permits a pensioner to request that a higher amount of PAYE be deducted so that any tax due at year-end is adequately covered, not many pensioners are making use of this option, which then leaves them with a tax debt at year-end, which they did not budget for. In turn, this has a significant negative impact on the outstanding debt book of SARS.
In response to this, recently introduced legislation makes provision for SARS to determine the effective rate of tax in respect of the combined employment and/or pension sources of income of a taxpayer, with reference to the latest data available to SARS, and to provide that rate to the retirement fund administrators for purposes of withholding PAYE.
It is the intention to introduce this service with effect from 1 March 2022.
In practice, this will mean the following:
- Prior to 1 March 2022, SARS will, where it deems necessary, provide retirement fund administrators with the PAYE withholding percentage for each of the pensioners on its payroll that qualify;
- This means that retirement fund administrators will be required to use the rate provided by SARS in respect of remuneration paid or payable with effect from 1 March 2022;
- SARS will provide the PAYE withholding rates by way of an electronic file in CSV format
- Where a PAYE withholding rate has not been provided by SARS in respect of a particular pensioner, retirement fund administrators must continue to apply the normal PAYE withholding rates;
- Where SARS provides a PAYE withholding rate, it will be by way of an annual directive. Where a pensioner’s circumstances change during the year (for example other employment income ceases, or death and so on), the retirement fund administrator may apply the normal PAYE withholding rate as opposed to the withholding rate provide by SARS with effect from the month in which it becomes aware of the change of circumstances;
- Notwithstanding the PAYE withholding rate provided by SARS, a pensioner may at any time, request his or her retirement fund administrator to withhold PAYE at a rate higher than the rate provided by SARS
- Notwithstanding the PAYE withholding rate provided by SARS, a pensioner may request his or her retirement fund administrator to withhold PAYE at a rate that is equal to the PAYE withholding rate under the normal PAYE withholding tables. In such a case, the retirement fund administrator is required to inform the pensioner of the possibility that the PAYE withholding rate will be insufficient to cover the tax liability of the taxpayer on assessment;
Should you require professional advice do not hesitate to contact our offices in this regard.
Sincerely,
