Key Amendments to Taxation Laws Amendment Bill B16

The Taxation Laws Amendment Bill B16 introduces important changes to South Africa’s tax legislation, impacting a variety of taxpayers, including individuals, businesses, trusts, and non-profits. Below, you’ll find an overview of the key amendments to help you assess how these changes may affect your tax planning and compliance obligations. Key updates include amendments to the Income Tax Act, 1962, Customs and Excise Act, 1964, and Value-Added Tax (VAT) Act, 1991.

1. Income Tax Act, 1962

The following amendments in the Income Tax Act, 1962, affect deductions and assessed losses for companies and individuals:

• Electric and Hydrogen Vehicle Deduction: A new provision (Section 12V) allows manufacturers a 150% deduction on qualifying costs related to buildings, machinery, and equipment for the production of electric and hydrogen vehicles. This deduction applies to assets brought into use between March 2026 and March 2036.
• Assessed Losses Post-Sequestration: Restrictions on carrying forward assessed losses are now more stringent for entities undergoing sequestration, liquidation, or deregistration. Companies may carry forward assessed losses up to R1 million or 80% of taxable income, whichever is higher, depending on specific liquidation and deregistration steps.

2. Customs and Excise Act, 1964

Changes to the Customs and Excise Act, 1964, address information access and procedural flexibility:

• Information Disclosure: Under the amended Act, the Commissioner for SARS can disclose taxpayer information, aligning with the Promotion of Access to Information Act requirements.
• Process Simplification: New provisions allow greater flexibility in the timing of export documentation and substitution of bills of entry, aiming to simplify compliance procedures.

3. Value-Added Tax (VAT) Act, 1991

The amendments to the VAT Act, 1991, focus on extended deadlines and simplifying compliance for non-resident vendors:

• Extended Deadlines for Imported Services: Taxpayers now have more time to account for VAT on imported services. Additionally, refunds are now provided for cases where price reductions occur on imported goods and services.
• Non-Resident Vendor Compliance: Non-resident vendors offering electronic services to South African clients no longer need a local representative if they have minimal or no presence in the country.

4. Tax Administration Act, 2011

Updates to the Tax Administration Act, 2011, allow for broader representation in court and streamline dispute resolution procedures:

• Legal Representation: Senior SARS officials are now permitted to represent SARS in court, with costs recoverable from the taxpayer in certain instances. Taxpayers may also assign representatives to appear on their behalf.
• Dispute Resolution and Appeals: The amendments expand alternative dispute resolution (ADR) options for objections and appeals, providing additional time for lodging appeals under specific circumstances. Criteria for selecting tax board chairs have also been updated, and certain write-offs for tax debt are now disallowed.

5. Taxation Laws Amendment Act, 2022

This amendment includes technical corrections that clarify existing provisions to improve compliance and administration. For instance, changes simplify how certain processes are managed, reducing administrative burdens.

Conclusion

The Taxation Laws Amendment Bill B16 brings substantial updates aimed at streamlining compliance, offering targeted deductions, and enhancing procedural clarity. Taxpayers, from individuals to non-profits, may benefit from these changes but may also need to review their strategies in light of these amendments.

To stay compliant and optimize your tax position, consider consulting with a tax professional who understands the specifics of the Taxation Laws Amendment Bill B16 and how it affects your financial situation.