Tax Consulting SA's recommendations for the newly appointed SARS commissioner

12 April 2019 Consultancy.co.za

As Edward Kieswetter takes over as the new Commissioner for the South African Revenue Service (SARS), a combination of gathering information form accountants and extracting the authoritative power of current SARS regulations is the ideal strategy in the current South African environment. 

This is according to Jean du Toit, who is a Senior Attorney at South African financial consultancy Tax Consulting SA. The firm has been closely monitoring developments in South Africa’s revenue policy, particularly as default and fraud rates have hit an unprecedented high in the country.

The firm has made a number of recommendations vis-à-vis the South African budget this year, and has been vocal in simplifying budget measures in order to prevent unnecessary concern amongst South African businesses and consumers alike. Now, the firm has offered its advice for the new SARS commissioner.

Kieswetters’ appointment to the top spot at SARS has been received favourably amongst the public and private sectors alike in South Africa. He was previously the Deputy Commissioner at SARS, and is credited with the large pools of revenue that are drawn from the wealthy sections of South African society.

Tax Consulting SA's recommendations for the newly appointed SARS commissioner

“But these are extraordinary times and the question being asked by compliant South African taxpayers is why we should pay our taxes when SARS have in the past clearly not been doing their job?” says du Toit, urging that Kieswetter has his work cut out for him in the current scenario.

According to du Toit, one of the major concerns for Kieswetter is the level of corruption within SARS itself, given that a number of people implicated in recent scandals plaguing the South African economy have claimed that they had support from high lvel officials within the organisation.

Du Toit recommends screening his staff, not only to identify compromised officials, but also to assemble a task force of sorts that will be available to move in on fraudulent practices. Once this force is assembled, du Toit recommends using the power afforded by Section 50 of the Tax Administration Act.

Under the provision, judges are appointed to supervise a comprehensive investigation of non-compliance within an organisation. In the current environment, Kieswetter would be best served to invoke the Section wherever required to prevent further state capture incidents.

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South African companies to be amongst the worst hit by expat tax

16 April 2019 Consultancy.co.za

As the realities of the proposed expat tax gradually come to light, experts at financial consultancy Tax Consulting SA have indicated that the new policy is likely to hit companies and employers harder than it is expats themselves, particularly domestic organisations that send employees abroad. 

So far, the focus has been on the struggles in store for wealthy South African expats, who might be taxed a considerable amount of their income if they earn in excess of R1 million. As a result, South Africans living abroad are losing their competitiveness on the job market, given that they require a larger cushion.

Now, more analysis has revealed that the scenario is equally bad for South Africans working for domestic firms, who are sent abroad on assignments. As per the new proposed policy, if the foreign assignment runs for more than 183 days, then the employee is subject to the heavy expat tax.

South African companies to be amongst the worst hit by expat tax

Calculations have placed this tax as high as 45% of foreign income in some cases. Rather than ensuring compliance, which is the purpose of the policy, the new tax is at risk of deterring South Africans from accepting foreign assignments, which runs against the current goals of the government.

The President has made clear his goals of opening South Africa’s doors to foreign businesses. Nevertheless, trade and collaboration with foreign firms is a challenge if South Africans are not predisposed to working abroad. Analysts at Tax Consulting SA have been watching the developments closely, and have warned of this danger. 

“The reality is that with this amendment, any additional cost would ultimately have to be borne by the employer, as no expat would accept an assignment without these benefits and, to ensure that these assignments remain lucrative, the employer would have to increase the expat's package,” said the firm.

The new tax is also likely to affect other sections of South Africans living abroad, including those who are permanent residents in another country but continue to have assets in South Africa. Others who will be hit include permanent residents abroad who have not yet settled their finances in South Africa.