Deloitte's expectations from the upcoming budget statement

25 February 2020 Consultancy.co.za

Ahead of the budget statement 2020 to be delivered by Finance Minister Tito Mboweni next week, Deloitte has highlighted the need for the government to announce business-friendly policies in order to boost economic growth in South Africa. The firm recommends a focus on the small and medium enterprise (SME) sector.

Deloitte’s recommendations came in a statement, and follow a detailed list of budget recommendations being released by fellow Big Four accounting and advisory firm PwC. The two firms appear to be in conjunction with respect to South Africa’s tax policy, with both advocating more leniency in personal and corporate tax alike.

The recommendations come against the backdrop of a prolonged period of economic stagnation in South Africa, brought about by a variety of political and economic conditions. Innovation in the domestic market and foreign investment have been positioned as the two tickets to economic growth for South Africa.

Deloitte - Budget Statement 2020

The government has endorsed these views, although increasing tax rates has also been deemed necessary in order to tackle the growing strain on public resources. For the SME sector, which is the centre of most innovative activity, the growing tax rates have been a significant barrier to growth.

Growing tax rates also pose as a deterrent to foreign investment, and Deloitte recommends a change in policy in order to rectify this counterproductive scenario. This is among a number of other recommendations for the upcoming Budget Statement, due to be delivered on the 26th of February.

“The cost of tax compliance remains a significant challenge for small businesses. Addressing this issue, in conjunction with other measures such as tax incentives or tax breaks for small and medium-sized enterprises, will reduce the cost of doing business and aid this important segment of the economy,” said the firm in a statement.

“Businesses and investors will be hoping for evidence of a move towards greater policy coherence and consistency, along with better regulatory certainty. Wider reforms to improve the ease of doing business in South Africa for all corporates would also be a welcome development,” added the firm.