* These rates are proposed in the Rates and Monetary Amounts and Amendment of Revenue Laws Bill No 10 of 2012. This Bill is yet to be promulgated into law.
** These rates are proposed in the 2012 Draft Taxation Laws Amendment Bill. It should be noted that this is still a Draft Bill.
South Africa did not feel the full extent of the economic downturn, unlike Europe, but trends seen in the more affected countries are being detected and reported in South Africa to some degree."The authorities absolutely have continued to clamp down ...
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South Africa did not feel the full extent of the economic downturn, unlike Europe, but trends seen in the more affected countries are being detected and reported in South Africa to some degree.
"The authorities absolutely have continued to clamp down [on revenue collection], I would say in an unreasonable and over the top manner. To mix my metaphors – they are aiming for the low-hanging fruit and squeezing the lemon dry," said one tax adviser.
"[SARS] has a business centre in Cape Town and they are going for all sectors but some in particular like financial and construction companies," says another.
One story illustrates this well: "The life insurance sector didn't see a query from SARS for a decade or so – now they always have to deal with them. They call up and the revenue just said: "Get used to it"."
Inevitably, this kind of increased stringency leads to litigation. According to one lawyer, this leads to excessive behaviour: "The courts can be frivolous, bullying, overbearing. Court is a lottery."
It's not all negative towards the authorities however, with praise for SARS's stamping out of tax abuse: "I do feel the national treasury team has been very smart in identifying areas of abuse and has closed down most of them. Their response to these abuse areas has led to good tax results," said an adviser.
Tax law in South Africa continues to change and evolve, which can frustrate practitioners: "Every year there is new law; it hasn't settled for a while," said one, while another is more forthright: "The law is becoming, to use this word, unbearable. They write the law, and then change it, then the next year change it back to the start. It's rarely proper in the first place – nothing is ever the same."
Along this line there is a new draft bill. Recommendations include provisions for the treatment of debt and equity, a new interest withholding tax and new thin capitalisation rules. Advisers also hope these proposed changes will bring more harmony between the tax law and the relatively new companies act.
It is seen overall as a good thing for the South African economy though, as one partner said: "It is quite positive; they are making an effort to make South Africa more attractive and competitive."
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