SECOND PROVISIONAL TAX – 28 FEBRUARY 2025 DEADLINE.
- Disposal of assets that could result in capital gains
- Any major tax event that could have a tax implication
A reminder that company assessed losses brought forward from a previous year of assessment can only be offset against a maximum of 80% of the current year’s taxable income or R1 million, whichever is higher.
A provisional return must be submitted by all provisional taxpayers. Even if the taxpayer owes no tax, a ‘nil’ return must be filed on time.
Please ensure your information is submitted to our tax department timeously. Should you require professional advice in this regard please do not hesitate to contact our offices.
The Budget That Never Was – New Budget Date 12th March 2025.
We provide below an overview of the budget that never was… The new budget date is set for the 12th March 2025.
A notable proposal was the increase in the value-added tax (VAT) rate by 2 percentage points to 17 percent, effective from April 1, 2025, expected to raise substantial additional revenue. To mitigate the impact on low-income households, the government plans to expand the list of VAT zero-rated essential food items.
Personal income tax adjustments included full inflationary adjustments for the bottom two tax brackets and all rebates, while the remaining brackets would have been partially adjusted, generating an additional R3 billion in revenue.
Corporate tax rates were to remain unchanged, but measures to close loopholes and enhance compliance, such as stricter transfer pricing regulations and anti-avoidance rules, were proposed. Transfer duty on immovable property was to be adjusted to accommodate inflation.
Excise duties on alcoholic beverages and tobacco products were set to increase by 6.83 percent and 4.83 percent, respectively, aligning with inflation and public health objectives. Additionally, a sugar tax was to be introduced to curb the consumption of sugary beverages.
Overall, the 2025 tax proposals aimed to enhance revenue collection, promote economic growth, and ensure fiscal sustainability. These measures were expected to provide the necessary resources to support government spending on critical areas such as infrastructure, healthcare, and education, while addressing the challenges of tax evasion and avoidance.
CIPC Initiates Deregistration of Non-Compliant Companies.
The Companies and Intellectual Property Commission (CIPC) has announced a significant wave of deregistrations due to continued non-compliance with the Companies Act. As of January 17, 2025, a large volume of companies have been deregistered for failing to meet obligations such as Annual Returns and Beneficial Ownership declarations.
The CIPC has highlighted that the high level of inactive businesses among companies significantly contributes to low compliance levels. Directors are advised to register companies only when there is a genuine economic or business opportunity. Even dormant companies must comply with the provisions of the Companies Act, as they pose risks of being used for money laundering, terror financing, and other criminal activities.
The consequences of deregistration for non-compliant businesses are severe. Directors may be held personally liable for the company’s debts, bank accounts may be frozen, service providers may refuse to deliver services, and creditors may refuse to pay, as the business does not legally exist. Although businesses can apply for reinstatement after final deregistration, only those that can provide confirmation of economic activity or other economic value at the time of final deregistration will be reinstated. The reinstatement process is cumbersome, requiring evidence of economic activity along with the relevant form.
The CIPC issues reminders to businesses about their responsibilities to comply with annual returns and beneficial ownership requirements via email and SMS directly to the provided contact details of directors and members. Clients are urged to ensure that their contact details are up to date at all times.
Businesses are advised to check their company status via Bizportal or e-Services. If the current business status is AR deregistration process, businesses must submit all outstanding Annual Returns and Beneficial Ownership Declarations urgently to avoid final deregistration and the consequences thereof.
Should you require professional advice in this regard please do not hesitate to contact our offices.
IMF Issues Warning to South Africa Amid Economic Challenges.
On January 31, 2025, the International Monetary Fund (IMF) issued a stark warning to South Africa, highlighting several ongoing economic challenges that could hinder the country’s growth prospects. The warning comes in the wake of the IMF’s Article IV Consultation with South Africa, conducted from November 11 to 25, 2024.
The IMF’s report underscores the elevated fiscal deficits and rising public debts as significant concerns. Despite some improvements in electricity generation and monetary policy easing, the IMF projects that real GDP growth will accelerate from an estimated 0.8% in 2024 to 1.5% in 2025. However, the IMF cautions that these gains could be undermined by potential geoeconomic fragmentation and protectionist policies in an uncertain global environment.
The IMF also emphasized the need for more ambitious fiscal consolidation efforts to address the country’s public debt, which is expected to continue rising under the baseline scenario. The report warns that the situation could worsen in 2025 due to likely above-inflation wage hikes for government workers and increased social spending.
In addition to fiscal concerns, the IMF highlighted the importance of meeting South Africa’s climate goals. The fund recommended increasing effective carbon taxation and accelerating the rollout of renewable energy to achieve these objectives. On a positive note, the IMF expects inflation to stabilize around the midpoint of the central bank’s target range of 4.5%.
The South African Reserve Bank (SARB) recently cut interest rates by 25 basis points, bringing the repo rate to 7.50%, closer to the neutral level of 7.0%. The IMF supports this move but suggests transitioning to a lower point target with a well-calibrated tolerance band to strengthen macroeconomic stability.
The National Treasury has acknowledged the IMF’s concerns and stated that the government’s response aligns with addressing both immediate and long-term economic challenges. The Treasury remains committed to fiscal consolidation and setting debt on a sustainable path, with a focus on stabilizing the electricity grid, enhancing freight and ports operations, and promoting equitable growth.
SARS Reports Over 2 Million Tax Directive Applications for Savings Withdrawals.
The two-pot system, designed to provide taxpayers with greater flexibility in accessing their retirement savings, has seen widespread adoption. SARS has emphasized the importance of utilizing digital channels for tax directive applications. The simulated WhatsApp calculator has been used 90,283 times, and the online calculator on the SARS website has been used 952,403 times. These digital tools have streamlined the process, allowing taxpayers to avoid long queues at SARS branches.
Despite the success of the two-pot system, SARS has raised concerns about taxpayers understating their incomes to receive a more favourable tax rate. Commissioner Kieswetter warned that penalties would be imposed on those who engage in this behaviour, which he described as bordering on criminality.
Should you require any assistance in this regard please do not hesitate to contact our offices for professional advice in this regard.
Sincerely,
