Taxation Laws Amendment Bill Sent for Assent

Parliament

The Taxation Laws Amendment Bill (TLAB) and the Tax Administration Laws Amendment Bill (TALAB) have been passed by parliament and sent for assent.

Both bills were published for comment in July 2017.

The main tax proposals contained in the TLAB are:

•    A levy on bargaining councils to address non-compliance;
•    A higher fringe benefit exemption for bursaries to learners with disabilities;
•    Removing the foreign employment income tax exemption in respect of South African residents;
•    Addressing the circumvention of anti-avoidance rules dealing with share buy backs, dividend stripping and contributed tax capital;
•    Strengthening anti-avoidance rules relating to mining environmental rehabilitation funds;
•    Extending the application of controlled foreign company rules to interposed foreign trusts and foreign foundations;
•    Changes in the tax treatment of banks due to IFRS9; and
•    Tax amendments due to the SAM framework for long term insurers.

The main tax administration proposals outlined in the TALAB include:

•    Assisting micro businesses transitioning into the small business corporation system;
•    Employees’ tax and reimbursement of travel expenses;
•    Application of the cap on deductible retirement fund contributions;
•    Taxation of interest payable in respect of normal tax by SARS;
•    Phased implementation of Tax Administration Act, 2011, interest rules by tax type; and
•    Transitional arrangements regarding processes before commencement of the new Customs Acts.

The Rates and Monetary Amounts and Amendment of Revenue Laws Bill has also been passed by parliament.

It was tabled on 25 October 2017.

The bill aims to:

•    Fix the rates of normal tax;
•    Amend the Transfer Duty Act, 1949; so as to amend transfer duty monetary thresholds;
•    Amend the Income Tax Act, 1962, so as to amend rates of tax and monetary amounts;
•    Amend the Customs and Excise Act, 1964, so as to amend rates of duty in Schedule 1 to that Act;
•    Insert a new part;
•    Insert a new section;
•    Insert new tariff items;
•    Amend the Taxation Laws Amendment Act, 2016 so as to change an effective date;
•    Amend the Rates and Monetary Amounts and Amendment of Revenue Laws Act, 2016 so as to make corrections;
•    amend the Value-Added Tax Act, 1991, so as to amend a provision; and
•    Provide for matters connected therewith.

The Insurance Bill has also been passed by parliament and sent for assent.

The bill was tabled in parliament in January 2016.

The proposed legislation aims to put a legal framework in place for the prudential supervision of insurance businesses in South Africa that meets international standards for insurance regulation and supervision.

It also seeks to promote financial inclusion and financial transformation through the introduction of a micro-insurance regulatory framework.

The policy objectives of the bill include:

•    Enhancing access to insurance;
•    Enhancing financial soundness; and
•    Alignment with international standards.

A new Solvency Assessment and Management regime would be introduced as well as a framework for insurance group supervision.

The proposed legislation also aims to facilitate alignment with international standards in accordance with South Africa’s G20 commitments.

The bill addresses regulatory gaps identified by the IMF/World Bank’s Financial Sector Assessment Program evaluation of South Africa.

In terms of the envisaged twin peaks legislation, the bill will provide the framework within which the proposed prudential authority will carry out a forward looking risk-based insurance supervision.

The bill also seeks to delegate the power to make secondary legislation and other authority to implement and enforce the bill to the prudential authority.

During its deliberations, the standing committee on finance inserted a new definition on “financial sector code”.

Clause 30(4) was also amended to empower the Prudential Authority to prescribe governance principles and requirements in relation to the achievement and maintenance of stated commitments.

Parliament also passed the Adjustments Appropriation Bill.

Sabinet Cape Town Office

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